Quick Highlights:

  • Around one-third of Tesla’s imported Model Y inventory remains unsold in India.
  • High import duties push Tesla prices close to luxury ICE and premium EV rivals.
  • VinFast crosses 1,000 EV sales in just four months with local manufacturing.
  • Competitive pricing and rapid dealer expansion fuel VinFast’s early success.

Tesla’s India Dream Meets Market Reality

When Tesla Inc. officially entered India in mid-2025, expectations were sky-high. Years of anticipation, hints of local manufacturing, and Elon Musk’s global brand pull suggested a blockbuster debut. However, less than a year later, Tesla’s India story is shaping up to be far more complicated.

According to a Bloomberg report, Tesla is struggling to sell nearly one-third of its initial India shipment. Of the roughly 300 Model Y SUVs imported, about 100 units remain unsold even after four months. To manage inventory, Tesla is quietly offering discounts of up to Rs 2,00,000 to select customers, rather than launching a public promotional campaign.

This clearly shows that brand aspiration alone isn’t enough in India, especially in a market that is brutally rational about pricing.

Tesla Model Y
Tesla Model Y

A Single-Model Strategy Under Pressure

Tesla’s India launch has been built entirely around the Model Y, priced at close to $70,000 (around Rs 60-68 lakh). This makes it one of the most expensive electric SUVs available in the country.

While Tesla reportedly received around 600 bookings, official registration data paints a different picture. Only 227 Teslas were registered in India throughout 2025, suggesting many bookings failed to convert into deliveries. Buyers appear especially hesitant about the standard-range Model Y, while even the higher-priced long-range version has seen slower-than-expected movement.

This gap between interest and execution highlights a key challenge: India’s premium EV buyers still expect strong value, not just brand prestige.

Model Y
Model Y

Pricing: Tesla’s Biggest Roadblock

The biggest hurdle for Tesla remains pricing driven by import duties. Fully built imported cars face custom duties of up to 110%, dramatically inflating sticker prices. As a result, the Model Y now sits uncomfortably close to BMW, Mercedes-Benz, and BYD offerings, all of which have deeper local presence and established luxury credentials in India.

Tesla was clearly betting that its global image would offset this disadvantage. In my opinion, that was a misread of the Indian market, which is just as sophisticated and competitive as China when it comes to EV choice.

Global Headwinds Add to Tesla’s Challenges

Tesla’s India struggles also mirror its broader global slowdown. Bloomberg reports that Tesla’s worldwide sales declined in 2025 for the second consecutive year, allowing China’s BYD to overtake Tesla as the world’s largest EV seller. With shrinking global momentum, Tesla has less room to aggressively subsidize new markets like India.

Tesla Model Y
Tesla Model Y

VinFast: A Textbook India Entry Strategy

In sharp contrast, Vietnamese EV maker VinFast entered India just weeks after Tesla and has already delivered a far more convincing performance.

Within four months, VinFast has crossed 1,000 cumulative EV sales, including over 200 units sold in early 2026 alone. In 2025, the company sold around 830 EVs in just three months, positioning itself as India’s fourth-largest electric car player, behind Tata, MG, and Mahindra.

While the volumes are still modest, the trajectory is undeniably strong for a new entrant.

VF6
VF6

Local Manufacturing Makes the Difference

The biggest reason behind VinFast’s success is its decision to manufacture locally. Unlike Tesla’s Shanghai imports, VinFast bypassed import duties by setting up an EV assembly plant in Thoothukudi, Tamil Nadu.

  • Annual capacity: 50,000 vehicles
  • Scalable up to: 150,000 units
  • Strategic role: India as both a core market and export hub

This single decision dramatically lowered entry barriers and allowed VinFast to price its vehicles competitively from day one.

VinFast VF7
VinFast VF7

Smart Product Positioning: VF6 and VF7

VinFast’s product strategy has been equally sharp.

The VF6, initially priced in the Rs 16 lakh segment, competes primarily with the MG Windsor and Tata Nexon EV. This is a segment with clear gaps. Some buyers avoid Tata due to quality concerns, while others dislike MG’s design language. The VF6 offers comparable range, modern tech, and fresh styling, giving Indian buyers a genuinely new alternative.

The VF7, meanwhile, goes up against the Tata Harrier EV, Mahindra XEV 9E, and Mahindra BE6. Competition here is limited, yet demand is strong, making it one of the smartest segments to target. Unsurprisingly, these models are among the highest-selling EVs in India.

From where I see it, VinFast didn’t just enter India, it studied it.

VinFast VF6 Front
VinFast VF6 Front

Rapid Network Expansion Seals the Deal

Execution has been another VinFast strength. Within four months, the company has rolled out:

  • 25+ dealerships
  • 80+ service centers across key cities

This pace of expansion is faster than many recent EV entrants and sends a strong signal of long-term commitment, something Indian buyers value deeply.

Conclusion: Two Strategies, Two Outcomes

Tesla’s cold start in India underscores a hard truth: India rewards localization, pricing discipline, and market-specific thinking. VinFast’s early success, though still on a smaller scale, shows what’s possible with the right mix of manufacturing, positioning, and execution.

In my view, Tesla still has time to course-correct, but without local production or a broader product strategy, India may remain an uphill climb.

vf7 1
vf7 1

Frequently Asked Questions - FAQs

Q. Why is Tesla struggling in India?

  • Tesla faces challenges due to high import duties (up to 110%), premium pricing, limited model options, and intense competition from both global luxury brands and strong domestic EV players.

Q. How many Teslas have been sold in India so far?

  • As per registration data cited by Bloomberg, only 227 Tesla vehicles were registered in India in 2025.

Q. Why is VinFast performing better than Tesla in India?

  • VinFast benefits from local manufacturing, competitive pricing, smart segment targeting with the VF6 and VF7, and rapid expansion of its sales and service network.

Q. Where is VinFast manufacturing its cars in India?

  • VinFast operates an EV assembly plant in Thoothukudi, Tamil Nadu, with a capacity of 50,000 vehicles annually, scalable to 150,000 units.

Q. Can Tesla still succeed in India?

  • Yes, but success will likely require local manufacturing, better pricing alignment, and a broader product lineup tailored specifically to Indian buyers.