Tesla, the American electric vehicle (EV) giant owned by Elon Musk, is no longer expected to manufacture and set up a manufacturing facility in India, according to Union Heavy Industries Minister HD Kumaraswamy. The minister’s comments come as the Indian government announced fresh guidelines under a much-anticipated scheme aimed at attracting global EV manufacturers to establish local production.
Speaking to the media on Monday, Kumaraswamy stated that while several global automakers — including Mercedes-Benz, Hyundai, Kia, and Skoda-Volkswagen — have expressed willingness to manufacture electric cars in India, Tesla has shown no further interest. “Tesla — we are not expecting from them,” he said, marking the first official confirmation from New Delhi that talks with the EV behemoth have stalled.
The Indian government had unveiled a major incentive programme in March 2024, hoping to draw in foreign EV players with tax breaks and a clear investment roadmap. Under the scheme, companies agreeing to invest at least $500 million and begin production within three years would benefit from reduced import duties. The policy was widely seen as a response to Elon Musk’s earlier complaints about prohibitively high tariffs on imported EVs.
Despite that, Tesla’s engagement with the policy has been lukewarm. According to officials familiar with the matter, Tesla representatives participated in the first round of stakeholder consultations but did not attend subsequent meetings. An official quoted by the Press Trust of India indicated that Tesla’s absence from later rounds signaled a lack of serious commitment.
Tesla’s initial plans to enter the Indian market were scrapped in 2022 after the government insisted the company manufacture locally rather than rely on imports. Tesla had sought to first test market demand by exporting vehicles to India — a proposal New Delhi rejected.
In a high-profile development last year, Musk met Prime Minister Narendra Modi in Washington DC, where the two discussed potential avenues for collaboration in technology and innovation. Musk later hinted at investing in India, saying he was “trying to figure out the right timing.”
While Tesla may open two showrooms and establish a retail footprint in India, the company seems unlikely to go beyond that in the near term. Analysts say this could be due to India’s EV market still being in its infancy. Electric vehicles currently account for less than 3% of all passenger car sales in the country. Cost-conscious consumers, limited charging infrastructure, and suboptimal road conditions further complicate Tesla’s entry.
In contrast, domestic automakers have gained ground. Tata Motors dominates India’s EV segment with a commanding 60% market share, followed by MG Motors — now part-owned by India’s JSW — at 22%.
Globally, Tesla is under pressure from aggressive Chinese competitors like BYD. The company also faced its weakest quarterly sales performance in three years during the first quarter of 2025. Analysts attribute the decline to a combination of growing competition and a public backlash linked to Musk’s controversial stint in the Trump administration — a role he resigned from just last week.
Despite Tesla’s apparent disinterest, India continues to push for robust EV adoption, banking on international collaboration and local innovation to power the sector’s growth.
