Why Tesla Model Y is So Expensive in India?

Tesla has officially entered the Indian market with the launch of its Model Y, starting at approximately ₹6 million ($70,000), making India the most expensive country among major markets to purchase the electric SUV.

On Tuesday, Tesla began accepting orders via its official website and inaugurated its first retail showroom in Mumbai, marking a long-anticipated entry into the Indian auto landscape. Deliveries are expected in Q3 2025.

High Import Duties Push Prices Skyward

The Model Y’s steep pricing in India is largely due to import tariffs exceeding 100%, which significantly inflate the retail cost. Tesla will import the vehicles from China, as its U.S. production plants don’t manufacture right-hand drive (RHD) variants compatible with Indian roads.

• Model Y (RWD): ₹6 million (~$70,000)
• Model Y Long Range: ₹6.8 million (~$79,500)
• For context, the same car sells for $44,990 in the U.S., $36,700 in China, and $53,700 in Germany.

Tesla’s Full Self-Driving (FSD) software will also be available in India, priced at ₹600,000. The package includes future updates aimed at enabling minimal driver intervention, as part of Tesla’s broader autonomous vehicle vision.

Targeting India’s Niche Luxury EV Market

Tesla isn’t positioning itself to compete with local automakers like Tata Motors or Mahindra. Instead, it’s going after India’s luxury EV segment, which currently represents just 4% of the country’s overall vehicle sales. This pits Tesla directly against German premium players like BMW and Mercedes-Benz.

Globally, Tesla is grappling with sluggish sales and surplus production, prompting the company to seek new, premium markets like India. Despite earlier appeals to reduce import duties, Tesla has opted to launch through the import route while trade negotiations continue between Indian and U.S. officials.

Speaking at the launch, Maharashtra Chief Minister Devendra Fadnavis expressed hope that Tesla would go beyond imports and eventually invest in research, development, and manufacturing within India.

Tesla’s high-cost launch in India signals both a bold expansion strategy and a bet on long-term policy shifts. Whether the move will accelerate India’s adoption of luxury EVs or be hindered by its steep price tags and import taxes remains to be seen.