Can Tesla Crack India With a Rs 35 Lakh Model 3? Analysts Weigh In

A recent CLSA report suggests that Tesla's entry-level Model 3 could hit Indian roads with an on-road price tag of INR 35-40 lakh, factoring in road tax, insurance, and other costs. This estimate is derived from the car's $35,000 base price in the US, which balloons to roughly $45,000 (Rs 35-40 lakh) when adjusted for India-specific expenses. Even with the new EV policy slashing import duties to 15-20 per cent for foreign-made cars, this price range holds, the brokerage firm has said. 

India’s updated EV manufacturing policy, introduced last year, offers a reduced 15 per cent import duty on vehicles exceeding a $35,000 CIF value (down from a steep 110 per cent including agriculture cess) for cars above $40,000 CIF or 60 per cent for those below. However, to tap into these benefits, companies such as Tesla must establish a local manufacturing unit with a minimum investment of Rs 4,150 crore. The government is poised to finalise this policy soon, mandating a minimum turnover of Rs 2,500 crore by the second year for eligible firms.

CLSA believes Tesla could price the Model 3 20-50 per cent above rivals such as the Mahindra XEV 9e, e-Creta, or e-Vitara without rattling the domestic EV market. It argues that purchase decisions hinge on factors including interior space, features, design, resale value, and smart pricing, and not just the powertrain. Still, to truly crack India, Tesla would need a local plant to scale production and ideally offer models below the Rs 35-40 lakh range, it suggests.

Even a sub-Rs.25 lakh Tesla, the report suggests, wouldn’t shake up giants such as Maruti Suzuki, Hyundai, or Tata Motors. However, such a budget model might mean trimming features compared to Tesla’s signature offerings. Local manufacturing and deeper localisation, CLSA emphasises, are key for Tesla to roll out competitively priced cars and challenge India’s homegrown players.