Government Releases EV Manufacturing Policy, Tesla Pulls Back
Elon Musk’s electric vehicle giant, Tesla, has reportedly shown no interest in setting up manufacturing facilities in India, according to the country’s Heavy Industries Minister H.D. Kumaraswamy. This is the first public acknowledgment by the Indian government that its efforts to attract Tesla with incentives have not succeeded.
Tesla Plans Retail Presence Only
Despite not pursuing manufacturing in India, Tesla will open two showrooms and maintain a retail presence.
“Mercedes-Benz, Skoda-Volkswagen, Hyundai, and Kia have shown interest [in EV manufacturing in India]. Tesla — we are not expecting from them,” Kumaraswamy said.
Participation in Early Discussions, But No Further Commitment
An official from the ministry revealed that Tesla representatives were involved in the initial round of stakeholder discussions for the government’s EV policy but did not return for the second and third rounds.
Tesla has been in talks with the Indian government for years. In 2022, negotiations stalled when the government insisted on local production while Tesla wanted to begin with imports to assess market demand. Though Musk met Prime Minister Narendra Modi in Washington D.C. in 2023 to discuss opportunities, no investment followed.
EV Policy Fails to Entice Tesla
India recently launched a policy offering reduced import taxes for EV manufacturers willing to invest $500 million and begin local production within three years. However, the Indian EV market, where electric vehicles make up less than 3% of total car sales, may not yet be mature enough for a brand like Tesla. Additionally, local competitors offer more affordable options.
Infrastructure and Market Conditions Also Major Hurdles
Other challenges for Tesla include underdeveloped charging infrastructure and unsuitable road conditions in many parts of the country. Analysts also point to growing competition from Chinese EV makers like BYD and Tesla’s recent global sales decline, which hit a three-year low in early 2025.
Currently, Tata Motors dominates India’s EV market with a 60% share, followed by MG Motors at 22%. Despite Tesla stepping away from manufacturing plans, India remains focused on attracting other major global players to build EVs locally.
