Tesla (TSLA) is offering discounts of as much as $2,200 on its Model Y SUV in India in an effort to clear out roughly a third of the vehicles remaining unsold in the country.
The company shipped ~300 of the electric SUV into India this year but found that import tariffs, lackluster demand, coupled with cheaper and better-equipped models from BYD (BYDDF) (BYDDY) and BMW (BMWKY) left as many as 100 cars languishing at dealerships. Many of the unsold China-made Model Ys had previously been reserved, though the transactions were never completed, Bloomberg reported.
At issue is the price of the Model Y versus competitors. To protect the domestic car industry and limit luxury imports, India imposes a 110% tariff on imported vehicles, pricing the Tesla Model Y in the luxury category with a sticker price of ~$68,000 (~$80,000 for the long-range model).
By comparison, BYD’s (BYDDF) (BYDDY) comparable SUV, the Sealion 7, not only offers a more luxurious interior, but is priced at a much more competitive ~$57,000. Accordingly, BYD (BYDDF) (BYDDY) has enjoyed an 88% surge in registrations for its vehicles in India last year.
Despite the difficulty selling a more expensive vehicle in the country and government efforts to encourage local manufacturing—including an offer of a lowered 15% tariff on carmakers who commit to investing in manufacturing within a three-year timeframe—Tesla (TSLA) has no immediate plans to make any vehicles in India and has opted instead for a “retail-first” strategy.