As Tesla Imports Cars, VinFast And Locals Charge Ahead

Tesla is finally rolling into India, but not quite in the way that India had hoped. Instead of making cars here, Tesla will sell fully imported models from China and the US.

14 July 2025 2:08 PM IST

Car maker Tesla, which has been in the news for a lot of things—mostly unrelated to cars—has announced it is launching tomorrow in India with its Tesla Experience Centre in Mumbai.

However, the launch and sales will not involve cars manufactured in India, as originally desired by the Indian government. Instead, these will be cars made in China and the United States, imported here lock, stock, and barrel.

While the first consignment would have faced peak customs duties of 70% (for cars valued below $40,000), subsequent consignments might see reduced import duties. This, of course, depends on the final contours of the India-US bilateral trade agreement.

EV Rivals Arrive, Tesla Hesitates

Tesla was extensively wooed by India over the past year, but times have changed for Tesla and the electric vehicle (EV) industry.

The Chinese have now arrived, shaking up the global EV market in a way few legacy product markets have been disrupted—and that too by relative outsiders, ranging from battery giants like BYD to mobile phone software and hardware players like Xiaomi. When it’s not China, it’s Vietnam.

Vietnamese EV major VinFast will start production at its $2 billion facility in Thoothukudi, Tamil Nadu, by the end of this month, according to a report in Business Standard. Moreover, the company hopes to begin vehicle deliveries from the festive season starting in August.

VinFast Auto India is set...

Car maker Tesla, which has been in the news for a lot of things—mostly unrelated to cars—has announced it is launching tomorrow in India with its Tesla Experience Centre in Mumbai.

However, the launch and sales will not involve cars manufactured in India, as originally desired by the Indian government. Instead, these will be cars made in China and the United States, imported here lock, stock, and barrel.

While the first consignment would have faced peak customs duties of 70% (for cars valued below $40,000), subsequent consignments might see reduced import duties. This, of course, depends on the final contours of the India-US bilateral trade agreement.

EV Rivals Arrive, Tesla Hesitates

Tesla was extensively wooed by India over the past year, but times have changed for Tesla and the electric vehicle (EV) industry.

The Chinese have now arrived, shaking up the global EV market in a way few legacy product markets have been disrupted—and that too by relative outsiders, ranging from battery giants like BYD to mobile phone software and hardware players like Xiaomi. When it’s not China, it’s Vietnam.

Vietnamese EV major VinFast will start production at its $2 billion facility in Thoothukudi, Tamil Nadu, by the end of this month, according to a report in Business Standard. Moreover, the company hopes to begin vehicle deliveries from the festive season starting in August.

VinFast Auto India is setting up a 150,000 units per annum manufacturing facility, along with a 27-city dealership network, battery value chain partnerships, and aftermarket and service tie-ups. It also plans to export cars from Tamil Nadu.

While this approach is no guarantee of success, an embedded “Made in India” strategy has generally worked for car makers—whether it’s the Korean giants like Hyundai and Kia, Japanese brands like Toyota and Honda, or European car makers like Mercedes, BMW, Skoda, and Audi.

Finally, even as Tesla has hesitated over the past year, Indian players like Mahindra and Tata have stepped up their EV game—and consumers have responded enthusiastically.

India is a tough market to crack.

India Remains A Tough Auto Market

American brands like Ford and General Motors set up shop here and tried hard, but they did not succeed like the Koreans or the Japanese. There may be lessons in that, and perhaps Tesla was trying to avoid those very challenges to begin with.

Tesla now has excess manufacturing capacity elsewhere in the world and would obviously prefer to ship finished products into countries like India, as it does with others that allow more liberal imports.

While manufacturing jobs that could have come with Tesla will now come instead with entrants like VinFast, for some car companies, India may be a better source for components or software rather than a place to build cars.

Tesla already imports components from India and reportedly started a research and development (R&D) centre here four years ago. Other car makers have a larger footprint, but Tesla may yet end up creating the jobs that were once expected of it—only, they might be in software rather than hardware.

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