Tata and MG Motors dominate India’s EV space as Tesla delays manufacturing plans and grapples with global competition.
Tesla has officially pulled the brakes on its potential manufacturing plans in India. According to India’s Heavy Industries Minister HD Kumaraswamy, the electric vehicle (EV) titan, owned by Elon Musk, is “not interested in manufacturing in India.”
These comments surfaced on Monday, right after the Indian government rolled out detailed guidelines for its EV promotion scheme aimed at attracting global players. Despite India’s efforts to lure EV giants with lucrative incentives since March 2024, Tesla has chosen to stay off the production line.However, all hope isn’t lost for Indian Tesla fans. Kumaraswamy confirmed that while Tesla won’t set up manufacturing, it will open two showrooms in India, ensuring a retail presence. He further stated, “Mercedes Benz, Skoda-Volkswagen, Hyundai and Kia have shown interest in manufacturing electric cars in India.
Tesla – we are not expecting from them.”
An official also told the Press Trust of India that although Tesla had engaged in the first round of discussions regarding the manufacturing scheme, they were absent from the second and third rounds.
Why Tesla Stepped Back: Challenges and Market Reality
This development comes not long after US President Donald Trump declared in February that it would be “unfair” for the US if Tesla built a factory in India. Over the years, Tesla has repeatedly explored entry into India but with limited progress.
Initially, Tesla had plans to establish a base in India. But in 2022, the plan was shelved after the Indian government pushed for local manufacturing, whereas Tesla preferred to export first and test demand. In 2023, Musk said he was still “trying to figure out the right timing” for investment.
Earlier this year, Musk even met Indian Prime Minister Narendra Modi in Washington DC, where they discussed the “immense potential” for future collaboration in technology and innovation.
India took a major step in 2024 by cutting import taxes on EVs for companies committing at least $500 million in investment and agreeing to begin local production within three years. This followed Musk’s complaint that high import duties were keeping Tesla out of the Indian market.
Despite all this, industry analysts argue that India’s EV market isn’t mature enough for Tesla yet. EVs currently account for less than 3% of all passenger vehicle sales. Moreover, local options often come at half the cost of Tesla’s base model. Add to that India’s limited charging infrastructure and road conditions, and the hurdles become even more apparent.
Tesla’s Global Competition and Future in India
In contrast, Tata Motors holds the lion’s share of India’s EV market at over 60%, while MG Motors, co-owned by India’s JSW and a Chinese firm, takes second place at 22%.
Globally, Tesla is also feeling the heat from rising Chinese competitors like BYD. Its global sales hit a three-year low in the first quarter of 2025, partially due to backlash against Musk for his role in the Trump administration. Musk has since stepped down from that government role as of last week.
While Tesla fans in India may be disappointed, the game isn’t over yet. Retail stores are coming, and who knows what the future holds once the market matures further.
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