Tesla enters India with $70,000 Model Y as Musk yields to steep tariffs

Highlights:

• Tesla enters India after years of lobbying for lower tariffs
• Tesla opens first showroom in Mumbai, one is planned for Delhi
• Model Y bookings open on Tesla website
• Musk long criticised India for steep tariffs that remain around 100%

Tesla launched on Tuesday its Model Y at about $70,000 in India, a significant markup relative to its other major markets, reflecting the country's high tariffs on electric vehicle imports which CEO Elon Musk has long-criticised.

With deliveries estimated to start from the third quarter, the US automaker is targeting a niche electric vehicle segment in India that accounts for just 4% of overall sales in the world's third-largest car market.

It will compete mainly with German luxury giants such as BMW, Mercedes-Benz and South Korea's Kia rather than domestic mass-market EV players such as Tata Motors and Mahindra.

Tesla opened its first showroom in Mumbai on Tuesday and began taking Model Y orders on its website, marking its long-awaited entry into the market where Musk once had plans to open a factory.

For now, Tesla will import cars into a country where tariffs and related duties can exceed 100%, driving up the price for consumers.

Tesla's Model Y rear-wheel drive is priced at about 6 million rupees ($70,000), while its Model Y long-range rear-wheel drive costs 6.8 million rupees, according to the website.

The prices include the tariff and additional levies imposed by the state. There was no breakdown of the price on the website and Reuters could not immediately ascertain the listing price.

They compare with a starting price from $44,990 in the United States, 263,500 yuan ($36,700) in China, and 45,970 euros ($53,700) in Germany.

At the media-only event at the showroom, Tesla displayed two Model Y cars made in China and its supercharger, which it will install at eight different locations in Mumbai and in and around New Delhi, where it is also expected to open its next showroom.

"We are here to create the ecosystem, to invest in the necessary infrastructure including the charging infrastructure," Isabel Fan, a regional director at Tesla, said at the launch event.

"We are building from 0 to 100. It will take time to cover the whole country."

TALKS ON TARIFFS

Grappling with excess capacity in global factories and declining sales, Tesla has adopted a strategy of selling imported vehicles in India, despite the duties and levies.

The US EV maker has long lobbied India for lower import tariffs on cars, and Prime Minister Narendra Modi's officials remain in talks with US President Donald Trump's administration to lower the levies under a bilateral trade deal.

Tesla's US factories also do not currently make the right-hand drive vehicles that are used in India.

The company's Full Self-Driving capability is on offer at an additional cost of 600,000 rupees, but the website said that "active driver supervision" will be required, and the current features do not make the vehicle autonomous.

Although India's road infrastructure has improved, traffic discipline - like lane driving - is still rudimentary, EV chargers are far and few and stray animals, including cattle, and potholes on the road are a big hurdle, even in cities.

"In the future we wish to see R&D and manufacturing done in India, and I am sure at an appropriate stage Tesla will think about it," Maharashtra Chief Minister Devendra Fadnavis told reporters outside the new Tesla outlet.