Tesla Inc., led by Elon Musk, has taken a significant step toward entering India’s booming electric vehicle (EV) market by initiating the homologation process for its Model 3 and Model Y cars. Tesla India Motor & Energy Pvt. Ltd., the company’s local arm, recently submitted two new applications for certification, a mandatory step ensuring vehicles meet India’s safety, emission, and roadworthiness standards under the Central Motor Vehicle Rules, industry sources confirmed.

Homologation, the process of certifying a vehicle’s roadworthiness, is critical for sales in India. Tesla previously filed seven applications for test cars, with an eighth recently approved, signaling steady progress. This move aligns with ongoing US-India free trade talks aimed at reducing tariffs, potentially easing Tesla’s market entry.

Musk views India, the world’s third-largest car market, as a vital alternative to China amid US sanctions, though he favors exporting vehicles over immediate local manufacturing—a stance at odds with the Indian government’s push for a domestic plant.

India’s EV sector is surging, with passenger vehicle sales rising 20% to 99,165 units in 2024 from 82,688 in 2023, led by Tata Motors and JSW MG Motors. Luxury EV sales also grew, reaching 2,809 units from brands like BMW and Mercedes, up from 2,633.

The Federation of Automobile Dealers Associations reports a nearly 20% retail sales increase, with forecasts predicting a 43% compound annual growth rate. Government initiatives like the PM E-Drive scheme are fueling this growth, alongside a 31% jump in electric two-wheeler sales to 1.13 million units. EV penetration hit 7.46% in 2024, up from 6.39%, as India accelerates its green energy transition.