Tesla shares: What could be the impact of Elon Musk's EV launch in Indian market?
The cost of Tesla cars in India is much higher than that in the US, even without a federal tax credit — largely due to India's 70% to 110% tariffs on imported cars that Musk has long criticised, according to media reports.
With the launch of Model Y in India, Tesla is looking to tap a niche electric vehicle segment in India that accounts for just 4% of overall sales. But the question remains, how will this impact the company, which is struggling not only in sales but also in the stock market? Tesla's share price is down 25% in the last six months, while it has lost 6% in one month.
Most experts do not see any immediate impact on the company or its shares, but believe that Tesla's foray into Indian markets has longer-term strategic benefits.
"Tesla's long-awaited India debut with the Model Y marks a strategic, not sales-driven, entry. The car, priced at nearly ₹ 60 lakh due to India's steep import duties, puts it far out of reach for the average Indian buyer, especially in a market where over 75% of passenger vehicles sold cost under ₹ 15 lakh, and luxury car sales barely crossed 51,000 units in 2024. Yet, this isn't just about immediate numbers. Tesla is laying the groundwork," said Viram Shah, Founder & CEO, Vested Finance.
With India emerging as the world's third-largest car market and aiming for 30% EV penetration by 2030, the long-term upside is massive, Shah added.
But a major challenge for Tesla in India remains the high tariffs, and a solution on that front would be a key factor that analysts are keenly tracking.
"Due to India's high import tariffs, Tesla's imported models are currently expected to generate lower gross margins compared to its global sales. Ongoing US–India tariff negotiations will be a key catalyst to watch, as any easing of import duties would be a clear positive for Tesla, allowing it to offer more competitive pricing and expand its market share," said Prashant Tapse, VP-Senior Research, Mehta Equities.
On the other hand, if tariffs remain unchanged, Tesla's near-term upside remains limited, with its India play confined to a niche premium segment, cautioned Tapse.
Should Tesla commit to local manufacturing and align its pricing strategy accordingly, it could significantly strengthen its global growth narrative and solidify its Indian long-term position in one of the world's fastest-growing EV markets, he said.
Ross Maxwell, Global Strategy Lead at VT Markets, believes there are obstacles Tesla will need to address, and therefore, the initial impact will be muted. However, he added that India is a fast-growing but untapped market in the EV sector (with EV adoption below 2% even though it is the third largest auto market globally), meaning there is huge upside and untapped potential.
Since Tesla has entered India's EV space, should Indian EV manufacturers like Tata Motors and Mahindra and Mahindra worry? Well, the analysts remain split.
In the current scenario, Tapse believes that Tesla doesn't pose a potential threat to domestic EV players like Mahindra & Mahindra and Tata Motors, but it can be negative to global brands such as BMW, Mercedes-Benz, and BYD, which currently enjoy a solid presence in India's premium EV segment, which Tesla is tapping.
Tata Motors currently dominates the mass-market EV segment with models like the Nexon EV and Punch EV, priced between ₹ 10–20 lakh, while Mahindra & Mahindra is gradually expanding its EV portfolio with a focus on electric SUVs and its upcoming Born Electric (BE) series, expected in the ₹ 18–28 lakh range.
"Given Tesla's current premium positioning—with the Model Y priced at ₹ 60 lakh+ (inclusive of import duties and additional costs)—there is minimal direct competition with Tata's and M&M's core EV offerings in the near term," said Tapse.
He, however, added that concern arises if India relaxes import duties or if Tesla commits to local manufacturing. In that scenario, the pricing gap between Tesla and domestic EV players could narrow, posing a potential threat to Tata's and Mahindra's higher-end EV ambitions and premium models.
Meanwhile, Shah said that though Tesla's here to test the waters, even this symbolic move pressures competitors like Tata, Mahindra, and BYD to step up their EV game. It may not be a volume play today, but it's certainly a signal for tomorrow, he said.
Disclaimer: This story is for educational purposes only. The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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