麻豆视频

Recent developments, including Prime Minister Mr. Narendra Modi鈥檚 visit to the US, Tesla鈥檚 Indian job postings, and anticipated import tariff revisions, signal the EV giant鈥檚 imminent entry into Indian market. Tesla plans to initially import fully assembled vehicles (CBUs) to gauge demand before transitioning to local assembly through Completely Knocked Down (CKD) units, aligning with India鈥檚 鈥淢ake in India鈥� initiative. Supported by reduced import duties, this strategy will allow Tesla to assess viability before committing to local manufacturing. Tesla鈥檚 entry is expected to influence industry dynamics, consumer behavior, and policy reforms, driving competition and growth across India鈥檚 manufacturing, supply chains, and renewable energy sectors, while paving the way for other global EV players.

Strategic Consideration: CBU vs. CKD

Completely Built Units (CBUs) 鈥� Direct Import Route

Based on the recent developments, Tesla is considering importing fully assembled vehicles directly from its German gigafactory, which would allow the company to assess the market demand before committing to local manufacturing as a strategic advantage.

• Import Duty: India levied a 110% import duty on CBUs earlier, making premium EVs more expensive for Indian consumers. However, as part of the Union Budget 2025-26, basic import duties have been reduced to 70% for high-end vehicles priced over US$ 40,000 (~Rs. 35 lakh). This move is primarily aimed at attracting Tesla and other premium automotive manufacturers.
• Cost Dynamics: Importing CBUs would keep Tesla鈥檚 prices at a premium. For instance, the Tesla Model 3 (the cheapest offering by the company) is priced at ~US$ 40,000 (~Rs. 35 lakh) in the US and could cost over US$ 80,000 (~Rs. 70 lakh) in India after taxes and logistics. This would restrict Tesla鈥檚 consumer base to affluent buyers, limiting mass-market penetration.
• Economic Implication: The CBU route minimises the initial capital investment but does little to generate local employment or contribute to India鈥檚 automotive supply chain. Additionally, it may attract criticism from Indian policymakers focused on boosting local manufacturing under the "Make in India" initiative.

Completely Knocked Down (CKD) Units 鈥� Local Assembly

Alternatively, Tesla could import CKD kits and assemble them in India, which is a middle ground between full manufacturing and CBU imports.

• Import Duty: CKD units, which are vehicle components imported for local assembly, are now subject to a 20% import duty. This rate was reduced in the Union Budget 2025-26 from 25% to encourage local assembly and reduce costs for automotive companies. The move to reduce import duty aims to boost the industry鈥檚 growth and make vehicles more affordable.
• Cost Dynamics: CKD assembly would reduce Tesla's vehicle costs by ~40% compared to CBUs, making the Model 3 price more competitive at ~US$ 55,000 (~Rs. 48 lakh).
• Investment Requirements: The Indian government鈥檚 Scheme for Manufacturing of Electric Cars (SMEC) offers to reduce import duty further to 15% for companies investing at least US$ 500 million in local manufacturing.
• Economic Implication: The CKD option supports local job creation in vehicle assembly and logistics. It also aligns with the 鈥淢ake in India鈥� initiative, promoting local sourcing and supply-chain integration.

Why is Tesla Coming to India Now?

India's EV market, though still at a nascent stage, is on a continuous growth trajectory. In 2024, EVs accounted for 2.5% of the total 4.3 million cars sold in the country, with the Indian government aiming for 30% of all private vehicles to be EVs by 2030. India is a lucrative market for EV players, maybe not now, but certainly in the near future. Tesla reported a 1% YoY drop in its global vehicles sales in its FY24 results, which is a first time the company has reported this kind of drop in nine years. Tesla posted average YoY growth of ~35% in its deliveries over the past four years. Therefore, even a 1% decline represents a major slowdown. Additionally, the company has plans to launch more affordable models by the end of H1 2025. It plans to do so in a capex friendly way by utilising its existing manufacturing plants. The rapid expansion of India鈥檚 EV market, declining Tesla sales and the future plans of the company align perfectly for an entry in the Indian market.

麻豆视频鈥檚 Takeaways

CBU vs. CKD

For Tesla's entry into the Indian market, the CBU route appears to be the first strategic step, allowing the company to assess market demand with reduced import duties, thanks to the recent policy changes. However, if Tesla plans to stick to the CBU route in the near term, its strategic focus should be to launch affordable models to capture the rising demand of EVs in India. The CKD route emerges as a long-term plan, requiring significant investment to benefit from the SMEC鈥檚 lower import duties. However, Tesla is less likely to take the direct CKD route, given its mass adoption in China, where it delivered 657,000 EVs in 2024 compared to the total 100,000 EVs sold cumulatively in India by various Indian manufacturers. This raises few critical questions: With Donald Trump鈥檚 ongoing trade focus, will Tesla shift its China plant and move production back to the US? Or will it shift to India, which is making significant policy adjustments to attract the EV giant and make India an export hub to capture market share in emerging economies?

Effect on Indian EV Manufacturers

India's EV landscape is evolving rapidly, driven by government incentives and changing consumer preferences. Local manufacturers like Tata Motors, Mahindra Electric, MG Motor and Hyundai have gained significant traction by offering competitively priced, affordable EVs tailored to the Indian market. In contrast, Tesla鈥檚 technologically advanced vehicles come with premium price tags, likely exceeding Rs. 30 lakhs (~US$ 35,000) regardless of the chosen market entry route (CBU or CKD). Unless Tesla launches cost-efficient models in India, it is less likely to directly compete with the existing players in the mass-market segment. However, the rising middle class and increasing demand for premium vehicles present a lucrative opportunity for Tesla to capture the growing luxury EV market in India.

Conclusion

Tesla's strategic entry into India is set to transform the Indian EV landscape by driving policy reforms, intensifying competition and accelerating ecosystem growth. Its phased approach—testing demand through CBU imports before potentially transitioning to CKD local assembly—aligns with India's "Make in India" vision while catering to the growing premiumisation trend among Indian consumers. Tesla鈥檚 entry will create chain effects across manufacturing, infrastructure and renewable energy sectors. Investors should closely watch policy changes, strategic collaborations and market adoption to capitalise on emerging opportunities in India鈥檚 evolving EV market.