Tesla Enters Indian Market with Model Y, Targets Premium Segment at $70,000 Starting Price

Tesla has officially entered the Indian market, debuting its electric SUV, the Model Y, with a starting price of around $69,770, CNBC reports.

The launch marks the opening of Tesla’s first showroom in India in Mumbai, with plans for a second showroom in New Delhi.

The move has long been anticipated, as India is now the world’s third-largest auto market by sales. However, the Model Y’s price tag—significantly higher than its US starting price of $44,990—places it in India’s premium segment next to BMW rather than the local maker Tata Motors.

Industry experts attribute the increased cost to India’s import tariffs and luxury taxes, which can add up to 100% to the base price of electric vehicles. Tesla’s Chief Financial Officer, Vaibhav Taneja, previously acknowledged the company’s caution due to the country’s 70% tariff on EV imports and 30% luxury tax.

Despite the steep pricing, analysts say Tesla will likely find a niche customer base.

“I won’t say that these prices are completely out of range because you will find buyers in India for all price points,” said Vivek Vaidya, Global Client Leader for Mobility at Frost & Sullivan.

However, he noted that Tesla is unlikely to disrupt the mass market, where most vehicles are sold at a fraction of the Model Y’s cost.

According to Puneet Gupta, Director for the Indian automotive market at S&P Global Mobility, Tesla’s strategy appears to be more about “testing the waters” than generating immediate sales. The company has not yet committed to manufacturing in India, a factor that could eventually lower costs. India’s recent EV policy does offer reduced duties for companies investing in local production.

Canalys automotive analyst Diwakar Murugan described Tesla’s Mumbai showroom as a “soft power” move, implying that the company is laying the groundwork rather than making a full-scale commitment. He predicted that local manufacturing, if pursued, would not begin until 2028, depending on factors such as battery supply chain maturity and government incentives.

In the meantime, Tesla intends to hire locally and set up service and delivery centers, charging infrastructure, and logistics support. Meanwhile, the Model Y is expected to remain a niche product, aimed at affluent, tech-savvy consumers.

The ongoing trade negotiations between the United States and India, as well as evolving EV policies, may have an impact on Tesla’s long-term strategy in the region. Tesla CEO Elon Musk recently discussed potential collaboration opportunities with Indian Prime Minister Narendra Modi.