Tesla opening showrooms in India next month

Tesla (NASDAQ:TSLA) is finally entering the Indian market, opening a showroom in Mumbai and New Delhi, selling Chinese-made Model Y SUVs in the world’s most populated country.

The Mumbai showroom is scheduled to open in mid-July, followed later in the month with a showroom in New Delhi, Bloomberg reported on Friday. The milestone comes just 5 months after Tesla (NASDAQ:TSLA) CEO Elon Musk met with Indian prime minister Narendra Modi to discuss the country’s trade policies and manufacturing hurdles. India assesses a 70% tax on fully-built imported vehicles under $40K

According to documents viewed by Bloomberg, five Model Y vehicles have already arrived in Mumbai from Tesla’s (NASDAQ:TSLA) Shanghai factory. The vehicles were declared at 2.77M rupees ($32K) and attracted more than 2.1M rupees in import fees. This puts the vehicle at a base sticker price of more than $56K versus ~$40K for the same vehicle in the U.S., making it a tough sell in a country in which EVs account for just 5% of new vehicle sales, and less than 2% for luxury vehicles.

Nonetheless, the company is planning to expand throughout the country, with warehouses planned for Karnataka and Gurugram.

In March 2024, the Indian government introduced policies to increase the adoption of electric vehicles and attract global investment in its manufacturing sector. Under the new policy, up to 8,000 EVs can be imported annually by a foreign auto manufacturer at a reduced tariff rate, but only if the company commits $500M to establish local manufacturing facilities and component sourcing within the country.

Accordingly, Tesla (TSLA) has reportedly submitted a proposal for a $2B to $3B facility that can manufacture up to 500K vehicles per year.