Korean Media: After a Decade of Negotiations, Tesla Finally Abandons Plan to Build Factory in India!
On June 13, South Korea's daily newspaper JoongAng Ilbo published an article stating that Tesla has officially withdrawn its plan to establish a local manufacturing plant in India.
According to electric vehicle media Electrek, Indian Minister of Heavy Industries H.D. Kumaraswamy recently confirmed that Tesla has decided against building a manufacturing facility in India.
With this move, the nearly decade-long factory negotiation between Tesla and India is effectively over. The core point of contention was import tariffs. Tesla sought tariff reductions prior to investment in a local factory, while the Indian government insisted on linking lower tariffs to commitments for local production investments—ultimately leading to an impasse.
India proposed reducing import tariffs on electric vehicles priced above $35,000 from 110% to 15%, with the condition that automakers invest at least $500 million in local production within three years. Mercedes-Benz, Volkswagen, Hyundai, Kia, and several other companies expressed interest in the plan—but Tesla did not participate.
Signs of strain in relations first emerged in April 2024. Elon Musk canceled his scheduled meeting with Prime Minister Narendra Modi, originally intended to announce Tesla’s entry into the Indian market, opting instead to visit China. Subsequently, in July 2024, reports surfaced that Tesla executives had ceased official communications with Indian government officials.
Tesla also cited low utilization rates at existing factories as one reason for withdrawing its investment in India. As of Q1 2026, the capacity utilization rate at Tesla’s Berlin Gigafactory was approximately 65%, while Tesla’s global production exceeded deliveries by about 50,000 units during the same period.
Tesla’s sales performance in India also fell short of expectations. Although Tesla began retail operations in India in July 2025, annual sales reached only 225 units in 2025, with cumulative sales totaling around 383 units by April 2026. To clear inventory, Tesla implemented discounts of up to INR 200,000 and launched a six-seater variant of the Model Y in April.
In contrast, India’s electric vehicle market has seen rapid growth. In FY 2026, sales of electric passenger vehicles surged by 84%, reaching approximately 200,000 units. Tata Motors led with 78,811 units sold, followed by MG Motor (53,089 units) and Mahindra (42,721 units). BYD also sold 5,361 units.
While Tesla has withdrawn plans for local production in India, it intends to continue selling imported Model Y vehicles. Sales will proceed through showrooms located in Mumbai, Delhi, Gurgaon, and Bangalore.
Original article: toutiao.com/article/1867883580043400/
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