Technology/Tesla rules out manufacturing in India despite government push

New Delhi – Tesla has decided against manufacturing electric vehicles (EVs) in India, the country’s Heavy Industries Minister HD Kumaraswamy confirmed Monday, as New Delhi unveiled new incentives to boost EV production.

Despite years of negotiations, Tesla will only establish a retail presence with two showrooms, while rivals like Mercedes, Hyundai, and Kia have shown interest in local manufacturing.

A government official noted Tesla participated in initial talks but skipped later discussions.

The announcement follows former U.S. President Donald Trump’s February remarks that a Tesla factory in India would be “unfair” to the U.S.

Talks had stalled earlier when India insisted on local production, while Tesla sought to test demand via imports first.

Last year, India slashed EV import taxes for firms investing $500 million and starting production within three years a move partly influenced by Elon Musk’s complaints about high tariffs.

However, analysts say India’s EV market remains small (under 3% of total car sales), with affordability and charging infrastructure posing hurdles.

Tata Motors dominates India’s EV sector with a 60% share, while Chinese-backed MG Motors holds 22%. Meanwhile, Tesla faces global pressure from BYD and saw Q1 2025 sales hit a three-year low amid backlash over Musk’s political ties.

Musk, who met PM Modi in 2023, recently exited his U.S. government advisory role, but Tesla’s India plans remain in neutral.