As Tesla Self-Drives Into Mumbai, what the numbers say about India’s EV market

Tesla, the iconic and pioneering electric vehicle, finally makes an official entry into India today, on 15th of July. It has been a long wait, with lots of turns, speed-breakers and bumps along the way. The first showroom opens in Mumbai

The company has imported Model Y rear-wheel drive SUVs from its Shanghai factory, with deliveries expected to begin in late August, according to industry sources. Priced above $56,000 due to India’s 70% import tariffs on fully built EVs under $40,000, the Model Y targets affluent urban buyers. However, high pricing and limited local manufacturing plans could challenge Tesla’s appeal in India’s price-sensitive market, where premium vehicles account for less than 2% of total sales.

Tesla was initially supposed to eventually make its EVs locally and there were several reports of the Elon Musk-owned company being allotted land to set up manufacturing facilities. The company though has settled for importing fully made vehicles from China and the US. Latest reports in any case suggest that there is an inventory overflow with Tesla sales down globally. Some of Tesla’s software is developed and exported out from India.

Vietnam's VinFast Will Manufacture Locally

Coinciding with the opening of the Tesla showroom is the bold entry of VinFast, the Vietnamese automaker. It too has started taking bookings for its VF6 and VF7 electric SUVs on July 15. Unlike Tesla though, the company has invested $500 million in a manufacturing facility in Tamil Nadu, with a total commitment of $2 billion by 2030. The plant, set to produce 150,000 vehicles annually, will serve both domestic and export markets. VinFast has also partnered with Indian EV charging provider RoadGrid to bolster its charging and aftersales network, aiming to employ 3,500 local workers by 2030. CEO Pham Sanh Chau emphasized a collaborative approach, telling the media, “We don’t see Tesla or others as competition but as partners in green mobility.”

Chinese EV manufacturers, led by BYD and newcomer Leapmotor, are also targeting India’s growing market, leveraging advanced technology and competitive pricing. BYD, which sold 1.02 million battery electric vehicles globally in the first half of 2025, is a formidable global rival to Tesla. Leapmotor, backed by Stellantis, plans to launch during India’s festive season, capitalizing on the government’s new EV policy offering reduced import duties for local investors. However, India’s cautious stance on Chinese foreign direct investment may pose hurdles, pushing Chinese firms to seek partnerships with South Korean and Taiwanese companies.

Challenges and Opportunities 

Despite the challenges, global EV makers are looking at India’s growth potential as it is the world’s third-largest auto market and Indian consumers are quickly adapting to electric mobility. Estimates say that there are more than 5.6 million EVs in India. In 2024, more than 2 million EVs were sold, which is a 24% increase over the last year. Admittedly, 94% of these EVs are two and three wheelers, but electric cars sales have also gone up 2x in 2024.

There are already several Indian and India-based EV manufacturers in India. Tata Motors and Mahindra are the home-grown ones and Korean carmakers who have been long been in India like Hyundai, Kia and the Chinese-owned MG Motors have multiple models across price bands on offer.

India’s EV market is gaining traction, with penetration in the passenger car segment rising to 4.4% in June 2025, up from 2.5% a year earlier, driven by government subsidies and growing consumer interest.

But high import tariffs, infrastructure gaps, and consumer price sensitivity remain key challenges. India’s EV policy incentivizes local manufacturing with reduced duties for investments over $500 million, prompting commitments from VinFast and others. Tesla, however, has shown limited interest in local production, drawing criticism from Indian officials and U.S. President Donald Trump, who called such moves “unfair”.

Analysts expect intensified competition to drive innovation and affordability, but success will hinge on navigating India’s complex regulatory and economic terrain.