India’s ambitions to become a global hub for electric vehicle (EV) manufacturing have taken a dramatic and highly strategic turn.
The move comes even as Tesla has publicly declined to participate in India’s flagship electric vehicle manufacturing program and reflects the country’s apparent prioritization of technology-centric adoption over broad-based industrial development.
The move signals that India’s government, under Prime Minister Naredra Modi, is willing to wait for a symbolically powerful partner rather than settle for traditional players with less headline appeal.
India’s Minister of Heavy Industries HD Komaraswamy confirmed this week that Tesla has enough space to manufacture electric vehicles in the country today, despite India’s failure to adopt a comprehensive policy aimed at encouraging global companies to manufacture vehicles on Indian soil.
Tesla, according to the mastermind, will establish two retail showrooms, marking a limited but high-profile presence.
The remarks represent the first official acknowledgement that despite more than a year of negotiations, the Indian government has failed to fully convince Musk of its electric vehicle revolution.
The revelation comes at a time of strategic tension in India’s industrial policy. Mercedes-Benz, Skoda-Volkswagen, Hyundai and Kia have all expressed interest in manufacturing electric vehicles in India, encouraged by a new government scheme that offers significant tax incentives.
But the government’s cool reception of these audio executives — who bring decades of experience, robust logistics and proven customer bases — raises critical questions. Why is India seemingly marginalizing traditional audio producers in favor of courting a company that has repeatedly shied away from committing to the audio market?
The answer may lie partly in symbolism. Eloop Musk, for better or worse, has become synonymous with innovation, disruption, and futuristic ambition. A Tesla factory in Idia would represent more than a manufacturing site—it would be a statement. It would signal to the world that Idia is not just an assembly site for commercial cars, but a high-tech, next-generation front-wheel-drive vehicle and transportation company.
This vision is closely tied to Prime Minister Modi’s broader “Make Ip Idia” campaign and his ambition to establish Ip Idia as a global technology leader. When Musk met with Modi in Washington, DC, earlier this year, both leaders spoke of the “immense potential” for collaboration between the two countries. Tesla, with its Silicon Valley swagger and world-changing ambitions, fits perfectly into this narrative.
However, the economic realities of the world tell a different story. India’s electric vehicle market is still modest, with electric cars accounting for less than 3% of total passenger vehicle sales. Price sensitivity remains high among Indian customers, and locally manufactured electric vehicles such as those from Tata Motors and MG Motors dominate the market, offering significantly cheaper alternatives.
Tesla’s Model 3, even in its most stripped-down configuration, could cost Tesla buyers two to three times as much as a Tata Tiago EV. Furthermore, Tesla’s charging infrastructure remains scarce and unreliable, and local roads can be challenging for those with the precision driving skills that Tesla’s software excels at. In short, the country may be dreaming of Teslas while its reality still looks very much like Tata’s.
Moreover, the political landscape is even more complex. Tesla’s reluctance to build a factory in Idea may have been overshadowed by recent remarks by U.S. President Donald Trump that it would be “fair” for Tesla to move production overseas, especially to a market like Idea. Musk’s role in the Trump administration — until his resignation last week — has put him in the spotlight of highly charged politics.
Backlash over Musk’s political affiliations has already hurt Tesla’s global sales, with first-quarter 2025 figures showing the company’s worst performance in three years. Musk’s departure from his government role could give him more flexibility, but the damage done to Tesla’s image, particularly among liberal and conservative consumers around the world, could take years to repair.
India, for its part, is moving forward with its electric vehicle manufacturing platforms. The new scheme unveiled by the government offers attractive conditions: global automakers that invest at least $500 million and commit to local production within three years will benefit from reduced import tariffs.
This move is clearly designed to attract companies like Tesla, which have long complained about India’s prohibitive tax regime. Musk has previously cited India’s sky-high import duties as a major impediment to neutralizing the market, calling them “the highest in the world, by far” in a 2022 tweet. Even with these incidents, Tesla appears to be holding back, possibly waiting for broader market maturity or more favorable political conditions.
While India appears to be waiting patiently for Musk, it’s worth noting that others aren’t standing still. China’s BYD, already the world’s largest seller of electric vehicles by volume, is rapidly expanding its global presence and could overtake Tesla in key emerging markets such as Southeast Asia and Latin America.
In India, BYD has already launched electric MPVs and is actively building its dealer network. Meanwhile, local champions such as Tata Motors have captured more than 60% of the domestic EV market, and MG Motors — now partly owned by India’s steel giant JSW — is aggressively expanding with products tailored to regions in India.
These companies may not have the same recognition as Tesla, but they have price, adaptability, and first-mover advantage on their side.
This raises a critical question for Indian policymakers: Is it wise to bet on the country’s electric vehicle future on the hope that Elop Musk might one day build a Gigafactory in Gujarat or Maharashtra? Or should India double down on automakers that are already committed, already investing, and already selling vehicles that Indian consumers can buy and use today?
The apparent partnership of Mercedes-Benz, Skoda-Volkswagen, Hyundai and Kia suggests that Idia may be more focused on prestige than pragmatism. All four automakers have identified a willingness to participate in Idia’s electric vehicle journey, and each has distinct advantages.
Hyundai, for example, has already launched iOS 5 and Idia and has a strong local manufacturer base. Volkswagen and Skoda have deep ties to the Idia market through their Idia 2.0 strategy. Mercedes-Benz has a premium customer base and Idia and has already launched a Made-idia luxury electric vehicle, the EQS, in its launch market.
Yet those companies have found themselves overshadowed by the allure of Tesla — a company that, for now at least, refuses to compromise.
To be fair, Ipdia’s move for Tesla is not entirely without merit. The country’s leaders understand the soft power that Musk wields. A Tesla factory at Ipdia could catalyze further investment from other high-tech companies, serve as a validation of Ipdia’s reforms, and attract global media attention that an Ipdia plan could never achieve.
But there’s a risk that I’m expecting too much. If Tesla is content to stagnate while others surge ahead, India could end up being overlooked in the global electric vehicle race — not for lack of partners, but because it has pinned all its hopes on a single star.
At the time, Idia’s EV ambitions were at a crossroads. It could roll out the red carpet for Musk in the hope that prestige would bring progress. Or it could get serious about supporting the companies already willing to build, hire, and expand on Idia’s land. The clock is ticking, the roads are ready, and the future is electric — but whether Tesla will be part of that future remains to be seen.
