<div id="readability-page-1"><div> Tesla has reportedly decided to walk away from plans to build an electric vehicle (EV) factory in India, ending years of speculation and negotiations over local production. According to reports from local media on Tuesday, India’s Minister of Heavy Industries, H. D. Kumaraswamy, confirmed that Tesla has officially informed authorities it will not proceed with a manufacturing facility in the country. The decision marks a major shift in Tesla’s India strategy. While the automaker has spent years discussing local production opportunities with Indian officials in exchange for lower import duties, the company appears to have settled on a retail-only approach instead of investing in domestic manufacturing. Tesla has rapidly expanded its retail footprint in India since launching in the country last year, opening four showroom locations across Mumbai, Delhi, Gurugram, and Bengaluru, along with multiple Supercharger stations. The company imports Model Y and Model YL from Giga Shanghai for local deliveries. However, importing vehicles from China into India comes at a steep cost. Tesla currently faces import duties of up to 110% on foreign-built EVs, significantly increasing pricing and making its vehicles less competitive against locally manufactured rivals. Those high prices have lead to lackluster sales, with Tesla managing to deliver only 225 cars in 2025. To overcome those import duties, India attempted to attract automakers through local policies, which would have reduced the duties to 15% for EVs priced above $35,000. In exchange, companies were required to commit at least US$500 million toward local manufacturing investments. Tesla ultimately declined to participate, primarily due to a tariff standoff. Tesla pushed for lower import duties before committing to a factory, while Indian officials wanted Tesla to establish local production first before granting tariff concessions, with neither side backing down from their position. There were several additional challenges influencing Tesla’s decision, including gaps in India’s automotive supply chain, infrastructure limitations, regulatory uncertainty, and a mismatch between Tesla’s premium pricing and broader consumer purchasing power in the country, according to the reports. Despite shelving local manufacturing plans, Tesla is not abandoning India entirely. The company continues expanding its charging infrastructure in the country. The company also opened its latest Experience Center in Bengaluru just last week. </div></div>

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Tesla has abandoned plans to build an electric vehicle factory in India, opting for a retail-only approach instead. The decision follows years of negotiations over local production and high import duties of up to 110% on foreign-built EVs. Despite this setback, Tesla continues to expand its retail presence and charging infrastructure in India, having opened four showrooms and multiple Supercharger stations since its launch last year.

Tesla abandons India manufacturing plans: Report