High Tariff A Major Roadblock For Tesla’s India Entry: CFO

Amid speculations about its India entry, US-based EV giant Tesla has once again raised concerns about the high import tariffs. Calling the Indian market a “very hard market” for Tesla, the company’s CFO Vaibhav Taneja said that India’s current tariff structure is a roadblock for its India entry. 

“The current tariff structure with India is that any car, which we send in, is subject to 70% tariff and a 30% luxury tax. So, the same car which we’re selling (in the US) is 100% more expensive in India,” Taneja said during the company’s investor call for Q1 2025. 

Further, he pointed out that the tariff imposed on the company’s cars doesn’t bring any benefit to Tesla but the “local government”. The tariff situation has led Tesla to carefully evaluate the right timing to initiate its India entry, the CFO added. 

For context, India charges a 100% tariff on imported cars with a CIF (cost, insurance and freight) value of over $40,000 (over INR 34 Lakh). 

It is important to highlight that Tesla’s cheapest variant, Tesla Model 3, comes with a price tag of $42,490 (INR 36.3 Lakh). With the current tariff structure, the EVs could potentially come with a price tag of over INR 70 Lakh in India. 

Meanwhile, despite the high tariff, Taneja said that India could be a good market for Tesla. 

“We are working on it. It’s a great market to enter because India has a big middle class, which we would want to tap in, and that is the market which we want to be in. But, again, these kinds of things create a little bit of tension which we’re trying to work around,” he added. 

This isn’t the first time that the Elon Musk-led company has flagged the high duties charged by India. 

Musk has said in the past that India’s high import tariffs make Tesla vehicles unaffordable and that the company won’t manufacture in a country where it can’t sell and service cars first. 

“I’ll continue to advocate for lower tariffs rather than higher tariffs,” Musk added during the call.

Meanwhile, India is said to be considering cutting tariffs significantly for EV cars amid the ongoing trade deal negotiations with the US. It was reported earlier this month that the Centre has decided to go ahead with the cuts as it believes that the domestic auto industry has been protected for “too long”. 

On its part, Tesla has been gearing up to enter the Indian market. From finalising locations for its maiden showrooms in the country to hiring employees, the company has been working actively on its India entry plans. 

It was also reported earlier this week that the EV maker is mulling to diversify its sourcing and leverage India’s semiconductor capabilities. The company is said to have held initial discussions with Micron, Tata Electronics and Murugappa Group’s CG Semi.

Reports surfaced recently that Tesla is looking  for procurement options from US memory chip maker Micron and Murugappa Group’s CG Semi.

The EV maker is also gearing up to localise its supply chains to reduce cost and logistics risk. In the Q1 earnings call, Musk said that, “Supply chains need to be at least located in the continent in which the car is built.”