NEW DELHI – After much speculation and prolonged negotiations, the Indian government has confirmed that Tesla is not interested in manufacturing electric vehicles in the country.

This was conveyed directly by India’s Minister of Heavy Industries, H.D. Kumaraswamy, during a press conference, as quoted by BBC News on Tuesday (3/6), coinciding with the launch of official guidelines for the national electric vehicle (EV) incentive programme.

“Mercedes Benz, Skoda-Volkswagen, Hyundai and Kia have shown interest [in manufacturing electric cars in India]. Tesla—we are not expecting from them,” said Kumaraswamy.

Nevertheless, Kumaraswamy said Tesla still plans to open two retail showrooms in India.

Negotiations between Tesla and India over investment and EV manufacturing have actually been ongoing for several years.

However, talks reached a deadlock in 2022 when the Indian government insisted Tesla manufacture its cars domestically. Tesla, on the other hand, chose to export vehicles to India to test the market.

As of 2023, Tesla CEO Elon Musk claimed he was still looking for the right time to invest in India, and even criticised India’s high import tariffs, which had hindered Tesla’s entry in 2024.

Following those complaints, India announced a cut in EV import duties for global manufacturers willing to invest at least USD 500 million and begin local production within three years.

In early 2025, Musk and Indian Prime Minister Narendra Modi met in Washington DC to discuss potential collaboration on technology and innovation between the two sides.

Despite these developments, a source told the Press Trust of India that Tesla has not taken part in follow-up discussions regarding investment policies and domestic EV manufacturing in India.

Amid regulatory concerns and strategic business challenges facing Tesla, several analysts believe that India’s EV market remains underdeveloped for the company.

Electric vehicles currently account for less than 3% of total car sales in India, while EV charging infrastructure and road conditions are still inadequate to support the ecosystem, analysts said.

Additionally, Tesla’s entry-level models are expected to be twice as expensive as locally made EVs.

At present, India’s EV market is dominated by Tata Motors with over 60% market share, followed by MG Motors, a joint venture between India and China, with 22%.

Globally, Tesla is also under increasing pressure from Chinese manufacturers such as BYD.

Tesla’s sales plunged to a three-year low in the first quarter of 2025, worsened by public scrutiny of Elon Musk’s involvement in US President Donald Trump’s administration.

However, Musk eventually announced his resignation from DOGE at the end of May. (EF/ZH)