Washington DC:

Days after Tesla started hiring staff in India, signalling its potential entry into the market, US President Donald Trump has said that any potential plans of the EV maker to build a factory in India, to circumvent that country’s tariffs, would be ‘very unfair’.  The US President made the remarks during a joint interview with Tesla CEO Elon Musk for Fox News’ Sean Hannity.

President Trump recalled that he called out India’s high duty on cars during Prime Minister Narendra Modi’s visit to the United States last week, but agreed to work towards an early trade deal and resolve their standoff over tariffs.

During his US visit, PM Modi also met Tesla CEO Elon Musk, who has long criticised India for having import tariffs of around 100 per cent on EVs which protect local automakers such as Tata Motors in the world’s third largest auto market, where EV adoption is still at a nascent stage.

Mr Trump said it is “impossible” for Elon Musk to sell a car in India. “Every country in the world takes advantage of us, and they do it with tariffs… It is impossible to sell a car, practically, in, as an example, India,” he said.

However, the Indian government in March unveiled its new EV policy, lowering import taxes substantially to 15 per cent if a carmaker invests at least $500 million and sets up a factory.

President Trump said it would be “unfair” to America if Elon Musk did decide to build a factory there. “Now, if he built the factory in India, that’s okay, but that’s unfair to us. It’s very unfair,” Trump said in the interview.

India’s foreign ministry did not immediately respond to a request for comment.

Trump’s Reciprocal Tariff Threat

Donald Trump’s plans for reciprocal tariffs on every country that taxes US imports have raised the risk of a global trade war with American friends and foes. Under his proposed reciprocal tariff system, the US would impose the same level of tariffs on imports from other countries as those nations levies on American goods.

“If I said 25 per cent, they’d say, ‘Oh, that’s terrible.’ I don’t say that anymore… because I say, ‘Whatever they charge, we’ll charge.’ And you know what? They stop,” Mr Trump told Fox News on Tuesday while talking about his tariff plans.

Tesla’s India Entry

Elon Musk’s Tesla is expected to enter the Indian market as early as April this year, according to sources. The EV maker has reportedly selected locations for two showrooms in the Indian cities of New Delhi and Mumbai and posted job ads for 13 mid-level roles in India. 

However, Tesla does not currently manufacture any vehicles in India.

Tesla has long been rumoured to foray into India’s electric vehicle (EV) market but has faced several hurdles related to localised factory investments, regulations, and high taxes. It has previously lobbied for policy incentives as well as lower import duties.

U.S. President Donald Trump said it would be ‘unfair’ to the U.S. if Elon Musk (in picture) did decide to build a factory in India. File
| Photo Credit: AP

U.S. President Donald Trump has said that if Tesla were to build a factory in India to circumvent that country’s tariffs, it would be “unfair” to the U.S., in an interview with Fox News which aired on Tuesday (February 18, 2025).

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Mr. Trump called out India’s high duty on cars during Prime Minister Narendra Modi’s visit to the U.S. last week but agreed to work towards an early trade deal and resolve their standoff over tariffs.

Tesla’s CEO Elon Musk has long criticised India for having import tariffs of around 100% on EVs which protect local automakers such as Tata Motors in the world’s third largest auto market, where EV adoption is still at a nascent stage.

Mr. Trump said it is “impossible” for Mr. Musk to sell a car in the South Asian nation.

Also Read | Nobody can argue with me: Trump on reciprocal tariff with India

“Every country in the world takes advantage of us, and they do it with tariffs… It is impossible to sell a car, practically, in, as an example, India,” he said.

India’s government in March unveiled a new EV policy lowering import taxes substantially to 15% if a carmaker invests at least $500 million and sets up a factory.

Reuters reported on Tuesday that Tesla has selected locations for two showrooms in the Indian cities of New Delhi and Mumbai, and posted job ads for 13 mid-level roles in India. It does not currently manufacture any vehicles in India.

Mr. Trump said it would be “unfair” to the U.S. if Mr. Musk did decide to build a factory there.

“Now, if he built the factory in India, that’s okay, but that’s unfair to us. It’s very unfair,” Mr. Trump said in the interview.

Foreign Ministry did not immediately respond to a request for comment.

Mr. Trump’s plans for reciprocal tariffs on every country that taxes U.S. imports have raised the risk of a global trade war with American friends and foes.

Tesla Inc. is hiring in India, a sure sign it plans to enter the market shortly after Chief Executive Officer Elon Musk met Prime Minister Narendra Modi in the US.

The electric-vehicle maker sought candidates for 13 roles, including customer-facing and back-end jobs, according to advertisements on Monday on its LinkedIn page.

At least five of the positions, including service technician and various advisory roles, were available in both Mumbai and Delhi, while the rest of the openings, such as customer engagement manager and delivery operations specialist, were for Mumbai.

Tesla and India have engaged on-and-off for years, but the carmaker had stayed away from the South Asian nation over concerns on high import duties. India’s now reduced basic customs duty on high-end cars priced above $40,000 from 110% to 70%.

While India’s EV market is still nascent compared to China’s, it offers an avenue for Tesla to check slowing sales after it posted its first annual drop in EV sales in over a decade. India’s electric car sales neared 100,000 units last year compared to China’s 11 million.

Tesla’s India intent follows PM Modi’s meeting with Musk and President Donald Trump in Washington last week. Trump later said PM Modi agreed to begin negotiations to address the US trade deficit boost US military purchases, including steps to ultimately supply F-35 fighter jets.

Although Musk is a key member of Trump’s cabinet, the president didn’t say if the tech billionaire met Modi as a CEO of private companies or in his role with DOGE team. 

Musk’s role in Trump’s government has blurred the lines between his business and political interests. Last month, Italy confirmed talks with Musk’s SpaceX for a deal to provide secure telecommunications for the nation’s government, a development that followed Prime Minister Giorgia Meloni meeting with then President-elect Trump in Florida.

In April 2016, Elon Musk invited Indians to preorder the upcoming Tesla Model 3. Vishal Gondal was one of the first to sign up, paying a $1,000 deposit for a car that never arrived.

The founder and CEO of a health-tech startup called GOQii in India’s financial capital Mumbai, Gondal wasn’t sure when the automaker would launch in India or how much the car would eventually cost. But the Elon Musk fan was excited about the Model 3 and willing to wait.

In the eight years since Tesla’s initial promise to sell cars in India, other automakers have launched their own EVs. But the American automaker has failed to follow through, apparently because of concerns that taxes would make the cars too expensive in India, combined with the difficulties of building an Indian factory if it decided to shift production away from China.

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After six years without a Tesla or a clear explanation about the company’s plans for India, Gondal bought an electric SUV made by German automaker Audi. He got his $1,000 back in January 2023 with the help of a friend who helped him track down a Tesla sales manager in India.

India is the world’s third-largest auto market after China and the United States. But it’s unique. The average price of cars sold in India in 2023 was $14,000, compared with $47,000 in the United States. An American can buy a new Tesla 3 for about $40,000. That’s the price of a luxury car in India, and buyers would demand excellent after-sales service.

“I think Tesla may be a great tech company. But they just don’t know how to sell luxury cars,” Gondal said.

Since then, other automakers who have been selling luxury cars in India have also started selling EVs. Hemant Suthar, a Mumbai-based director of a design studio who had also prebooked a Tesla in 2016 before finally getting his money back in 2023, said that he didn’t think the minimalistic Tesla could compete with some of the more luxurious EVs now on Indian roads.

To woo automakers like Tesla while also protecting domestic carmakers like Mahindra and Maruti Suzuki, India reduced its import duties to 15% from 70%-100% in March 2024 for EVs cheaper than $35,000 — as long the automaker commits to building a factory in the country within three years.

Despite his earlier enthusiasm, in 2019 Musk expressed concern that import duties could double prices of Teslas made in India, making them “unaffordable.” Many in India expected Musk to announce plans for a factory there in April, but he canceled an expected trip at the last minute, citing “very heavy Tesla obligations.”

Tesla didn’t respond to an emailed request for comment.

The EV market has changed drastically in India and elsewhere in the past five years and Tesla’s own position has evolved since it built giant factories in China, Germany and the U.S. Sales are slowing and its only new product, the Cybertruck EV, lacks much of a market outside the U.S., so global sales have fallen year over year for two straight quarters.

According to a filing to the U.S. Securities and Exchange Commission, it can build 2.3 million cars annually. Production in 2023 grew by 35% to 1.85 million cars. In the first half of 2024, Tesla sold 831,000 vehicles worldwide, far short of the more than 1.8 million for the full year that Musk had forecast.

The novelty of EVs has been wearing off, said Tu Le, founder of the consultancy Sino Auto Insights.

“What was a huge opportunity five years ago is now almost a weight around their neck,” he said.

To keep a leading position among global automakers, Tesla needs new, more affordable cars for emerging markets like India, Tu said. Even a car priced at $25,000 is not competitive in China given the dominance of Chinese EV makers like BYD. They’re expanding overseas with both cheap and premium cars, wiping out Tesla’s first-mover advantage in a place like India.

“Every market they (Tesla) enter from now on, BYD is going to be looking at their watch and saying: What took you so long?” Tu said.

India’s growing auto market is dominated by its largest carmaker Maruti Suzuki, followed by South Korea’s Hyundai Motors and India’s Tata Motors. Electric vehicle sales doubled in 2023 but still made up just 2% of total car sales, according to market research firm Counterpoint Research. Of this, Tata Motors held more than two-thirds of the market, with Indian automaker Mahindra & Mahindra and China’s BYD shares growing.

BYD started making batteries in India in 2008. It was one of the top five EV brands in India in 2023 despite selling only two models — the six-seater e6 MPV and the Atto 3 SUV, Counterpoint said. It launched the BYD Seal in India in March 2024.

Many in India, a relatively small and crowded EV market, are skeptical about EVs. Ishan Raghav, the managing editor of the Indian car magazine autoX, said that to win over customers with an affordable EV for mass sales, Tesla would need to price its cars at a “sweet spot” of roughly $30,000.

“The only way to do that is if they build that car in India,” he said.

India says it does not restrict imports of Chinese EVs. But ties between China and India deteriorated after a military clash in July 2020, Raghav noted, and protections for domestic automakers will create other obstacles.

Even if Tesla were to sell cars in India after agreeing to build a factory within three years, most imported Teslas would sell for what luxury cars made by established players like Mercedes Benz and Audi cost. Those automakers have been in India for decades and already have extensive dealership and service networks.

Tesla has sold cars directly to American customers, but dealerships play a vital role in enticing customers with a luxury experience, said Matthew Degen of Cox Automotive, an American car research company.

“You go into an actual location, you meet with people, there are nice lounges. Now Tesla has showrooms, but that is different from dealerships,” he said.

Tesla also would also have to build a charging network in India, given the relatively small number of EVs already in the market.

Musk said in a July earnings conference call that Tesla is boosting capacity at its factories and that its affordable car — a small model expected to cost around $25,000 using new generation vehicle underpinnings and some features of current Tesla models — was “on track” for delivery in the first half of 2025.

The company’s plans for India remain unclear.

Rajesh Kumar Singh, a federal bureaucrat who heads the Indian agency for promoting industrial growth, said in a TV interview that the Tesla executive whom Indian officials had been talking with “got fired” and that India didn’t know what the company intended to do.

“We really don’t know,” he said.

New Delhi:

Elon Musk is expected to visit India to meet Prime Minister Narendra Modi next week and announce an investment of $2 billion – $3 billion in setting up a Tesla manufacturing unit in the country.

Over the past few years, Tesla has expressed interest in entering the Indian market, hindered mainly by steep import duties. However, with the recent announcement of reduced import tariffs for Electric Vehicles (EVs) priced above $35,000, provided the manufacturer gives a guarantee of investment of Rs 4,150 crore and sets up the manufacturing plant within three years with 25% localisation and subsequently achieves 50% localisation within five years, it is now presumed that Tesla will finally make its much-awaited India entry. 

Speculation is rife about Tesla’s plans for India. For starters, the $35,000 mark means Tesla can start importing all of its vehicles – its cheapest product in the US market is the Model 3, with a starting price of over $40,000. Tesla currently has a portfolio of four products.

We can expect these to come to Indian shores soon to compete in the premium and luxury EV space. Tesla products are expected to have a price advantage over existing luxury and premium EV players. In the luxury space, players like Mercedes and BMW have already made some investments and it is yet to be seen if they are eligible to avail the import duty benefits in the new scheme.

The Mercedes EV range in India starts at around Rs 80 lakh, while BMW’s cheapest EV iX1 costs around Rs 67 lakh. Pricewise, Tesla vehicles can even compete with products like the Hyundai IONIQ 5, priced at around Rs 46 lakh, and EV 6, which sells for about Rs 61 lakh. 

Tesla is expected to import products to India from Germany – the manufacturing of the right-hand drive version of Model Y has already begun at the Berlin Gigafactory. 

The real story would be Tesla’s entry into the mass market segment. It has announced Project Redwood, a small mass-market EV proposed to be launched in 2025, and expected to be priced at $25,000 or around Rs 20 lakh. This will drive straight into the territory of domestic EV players like Tata, Mahindra, and even Maruti Suzuki, all of whom have plans to launch EVs at various price points, including the Rs 20-25 lakh segment.

In FY24, the EV market share continued to be in the low single digits (at 2%) but saw a rapid growth of 91% over FY23. 

India is aiming to achieve 30% EV sales by 2030.

The EV segment in the country is led by Tata Motors with an over 70% market share. One of Tata’s most popular products is the Nexon EV, priced between Rs 14.5 lakh and Rs 19.9 lakh. Maruti’s hugely anticipated entry into the EV segment – the EVX – is also expected to be priced at around Rs 20 lakh – Rs 22 lakh.

On the other hand, it will augur well for Tesla to get access to the Indian market which can be not just a market for its low-cost compact hatch Redwood, but also a manufacturing hub for markets like ASEAN and Lat Am regions. India exported over 6 lakh cars in FY24.

Though there have been media reports of Tesla shunning the small EV project, the company has not confirmed these reports. Elon Musk took to X, formerly Twitter, to rebut the media outlet that reported it.

Tesla Plants

Tesla has plants in the US, Germany, and China. India will be the fourth country to have a Tesla manufacturing facility.

Factories In US

Fremont, CA Factory, US
Gigafactory Nevada, US
Gigafactory New York, US
Gigafactory Texas, US

Facilities Outside US

Gigafactory Shanghai, China
Gigafactory Berlin-Brandenburg, Germany

Elon Musk is coming to India when big global markets like the US have seen a slowdown in EV sales, forcing Tesla to downsize by 10%.

Tesla is also facing stiff competition from Chinese manufacturers, which with their low-cost manufacturing, offer EVs at much economical price points. 

In 2023, BYD, the Chinese EV and HEV manufacturer, sold over 60% more units than Tesla. 

The India entry will not only give Tesla access to the third-largest automobile market but also help it diversify its location and give it a manufacturing cost advantage.