Even with reduced duty, the cheapest Tesla car will cost ₹35-40 lakhs in India

As Tesla is soon planning to enter India, even after the reduction in the import duty to below 20 per cent, the cheapest car of Tesla will cost around ₹35 to 40 lakh, says a report by CLSA, a global capital market company.

The report highlighted that currently, Tesla’s cheapest Model 3 in the U.S. costs around $35,000 (approx. ₹30.4 lakh) at the factory level. With an expected reduction in import duties to 15-20 per cent in India, along with additional costs such as road tax and insurance, the on-road price would still be around $40,000, or approximately ₹35-40 lakh.

If Tesla positions the Model 3 at a price 20-50 per cent higher than domestic EV models like Mahindra XEV 9e, Hyundai e-Creta, and Maruti Suzuki e-Vitara, the report added that it is unlikely to disrupt the Indian EV market significantly.

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Even if Tesla decides to launch an entry-level model priced below ₹25 lakh on-road and gains market share, the report believes that the recent decline in Mahindra & Mahindra’s stock is already factoring in this scenario. However, the report suggests that Tesla’s entry would not have a significant impact on major Indian automakers, as the overall penetration of EVs in India remains lower than in China, Europe, and the U.S.Tesla in the coming months would be launching its models in Delhi and Mumbai.

Tesla Inc. has officially begun its hiring process in India, marking a significant step towards its long-anticipated entry into the domestic market. On 18th February, the electric vehicle (EV) giant posted a job listing on LinkedIn for the position of Consumer Engagement Manager in the Mumbai Metropolitan Region.

The report also outlined that Tesla would need to set up a manufacturing facility in India to make its cars more affordable and scale up its operations, even if import duties are reduced to below 20 per cent.The report highlighted that under India’s electric vehicle (EV) policy, Tesla could benefit from a lower import duty of 15 per cent on up to 8,000 units per year if it invests over ₹4150 crore billion in setting up a local facility.

The report draws a comparison with the Indian motorcycle market, where Harley-Davidson’s X440, priced 20 per cent higher than the Royal Enfield Classic 350, sells only around 1,500 units per month, whereas the Classic 350 sells about 28,000 units monthly. This suggests that Indian consumers are highly price-sensitive, making it challenging for Tesla to gain traction without competitive pricing.

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Overall, Tesla’s entry into the Indian market depends on whether it is willing to make a significant investment in local manufacturing. Without it, even with reduced import duties, Tesla’s cars may remain out of reach for a large portion of Indian buyers.