Tesla stalls on ‘Make in India’: EV giant to open showrooms, skips manufacturing plan

In a surprising pivot, Tesla has signaled disinterest in manufacturing electric vehicles in India, opting instead to open two showrooms in the country, Union Heavy Industries Minister HD Kumaraswamy revealed on June 2.

This announcement comes even as India positions itself as a global electric mobility hub with its ambitious EV manufacturing scheme, designed to attract global giants to invest in local production. “Tesla is not on our radar for manufacturing. They plan to open two retail showrooms, but beyond that, there is no serious interest in setting up a production facility,” Kumaraswamy told reporters in New Delhi.

In stark contrast, German and South Korean auto majors — Mercedes-Benz, Volkswagen-Škoda, Hyundai, and Kia — have expressed keen interest in participating in the ministry’s flagship EV scheme. Notified in March 2024, the policy offers manufacturers a significant incentive: the ability to import up to 8,000 fully built electric vehicles per year at a reduced 15% customs duty—provided they invest at least ₹4,150 crore in Indian manufacturing infrastructure and meet domestic value addition benchmarks.

Tesla's mixed signals

Tesla’s move to prioritize retail over manufacturing in India comes despite earlier speculation that the EV pioneer would use the scheme as a springboard into the Indian market. The buzz peaked in March 2024, when CEO Elon Musk was expected to announce a $2 billion manufacturing investment. That trip was abruptly canceled, with Musk citing “heavy Tesla obligations.” Just days later, he visited China—Tesla’s second-largest market—raising eyebrows in diplomatic and business circles alike.

In February 2025, Tesla posted 13 job openings in India — including for store managers and service advisors — shortly after Prime Minister Narendra Modi met Musk in Washington. At the time, the hires sparked hopes of a deeper engagement. But the recent announcement confirms Tesla’s India ambitions remain modest, at least for now.

Global pressure, domestic opportunity

Adding fuel to the geopolitical fire, former US President Donald Trump criticized Tesla’s India push earlier this year, calling it “unfair to the US” His comments echoed his broader protectionist stance against American tech companies expanding abroad.

Despite Tesla’s cautious stance, the Indian government remains bullish. “This scheme is strategically crafted to position India as a global hub for EV manufacturing,” Kumaraswamy said, citing alignment with the government’s ‘Make in India’ and ‘Aatmanirbhar Bharat’ initiatives.

Only global EV manufacturers with annual revenues of ₹10,000 crore or more, and fixed assets worth at least ₹3,000 crore, are eligible for the scheme. With defined local value-addition targets, the program is a calculated push to deepen India's EV ecosystem and reduce dependency on imports.

Timeline to rollout still uncertain

Even as guidelines were officially released on June 2, the application process for manufacturers is yet to begin. Analysts at Global Trade Research Initiative (GTRI) caution that tangible outcomes may still be months away. “It could take six months or more before firms are approved. Realistically, the first Indian-made EVs under this scheme won’t hit the market anytime soon,” GTRI said.

In the meantime, approved automakers can import premium EVs at concessional duty rates, giving early movers a foothold in the growing Indian market.

The bigger picture

As Chinese EV manufacturers like BYD gain ground globally and electric vehicle sales begin to plateau, Tesla’s India hesitation could be a strategic misstep — or a calculated pause. Either way, India’s doors remain wide open, and competitors are already lining up to step in.