US President Donald Trump has expressed opposition to Tesla building cars in India, citing high tariffs that can double the cost of premium-priced vehicles. The country is the world’s third-largest car market, but foreign brands only compete for a small portion of the overall demand.
Tesla CEO Elon Musk met Indian Prime Minister Narendra Modi last week, sparking speculation about potential tariff reductions that could pave the way for Tesla to launch in India. However, Trump warned Musk that building a manufacturing plant in India would be “unfair” and criticized the country’s high tariffs.
The Indian passenger-car market remains attractive due to its young and growing population, but demand for high-tech cars like Tesla is not large enough to support local manufacturing. The US President also highlighted the poor roads and high import duties in India as challenges for foreign brands.
Tesla has initially focused on testing the waters by setting up sales showrooms in Delhi and Mumbai, rather than building a full-scale factory. The company has announced plans to expand its production network globally, including construction of a factory in Mexico, but enthusiasm for electric vehicles has cooled due to high interest rates.
A market entry in India could provide Tesla with a much-needed boost, but it would come with significant challenges, including the presence of local brands like Maruti and Mahindra Group, which control over 40% of the overall market. With demand skewed towards small, low-cost cars, premium brands like Mercedes-Benz and BMW are struggling to make inroads in India.
Trump’s comments suggest that Tesla will likely dip its toes into the Indian market before making a full-scale entry, and the company has yet to respond to reports about potential tariff reductions.
Source: https://fortune.com/2025/02/20/donald-trump-elon-musk-tesla-factory-india-maruti-mahindra-tata