Tesla Model Y is struggling to sell in India, forced to lower prices for sales

【PCauto】The Tesla Model Y's high-profile entry into India in July 2025 belied the formidable challenge of penetrating the world's third-largest passenger car market.

India's 110% import duty on fully built-up (FBU) vehicles caused the Model Y's starting price to soar to ₹5,989,000 (approximately RM269,000), directly impacting price-sensitive consumers. After test drives, potential customers, realising they would need to pay nearly an additional ₹3 million (roughly RM135,000) in import taxes, ultimately walked away.

The result was that roughly one-third of the 300 imported Model Y units languished unsold, compelling Tesla to implement a clearance discount of ₹200,000 (around RM8,970).

While Tesla contended with the import duty burden, its rivals had already navigated around this barrier.

BMW, for example, effectively circumvented the bulk of duties by opting for local assembly via the Completely Knocked Down (CKD) route.

Priced at ₹4,990,000 (approx. RM224,000) for a comparably specified iX1, and bolstered by a stronger regional brand premium, BMW India witnessed explosive EV sales growth of nearly 200% in 2025.

The offensive from Chinese automaker BYD proved even more telling. Its Sealion 7 starts at ₹4,940,000 (around RM222,000)—nearly 17% lower than the Model Y—while delivering more features, superior performance, and a longer range.

Leveraging its collaboration with local enterprises, BYD registered an 88% year-on-year increase in India last year, achieving sales of 5,400 units—far surpassing Tesla's 227 units.

Confronted with this adverse market reality, Tesla pivoted its strategy. A key move came in late 2025 with the appointment of Sharad Agarwal, former head of Lamborghini India, to helm its local operations.

This appointment sent an unequivocal signal of Tesla's intent to fortify its luxury brand positioning to offset its price disadvantage.

Following his appointment, Agarwal acted swiftly to roll out experience centres and expand the Supercharger network in key cities such as Mumbai and Delhi—initiatives aimed at restoring consumer confidence.

However, the real solution likely lies in localised production. Reports indicate that Tesla plans to establish an assembly plant in India's Satara region, adopting a Completely Knocked Down (CKD) assembly model.

Should this plan come to fruition in 2026, import tariffs could plummet from 110% to 15%, potentially slashing the Model Y's price to around ₹3.6 million (approximately RM162,000).