Tesla Pursues New Market Amidst Global Sales Slump: Aim for Revival in Uncharted Territory

In an ambitious expansion, electric vehicle pioneer Tesla has ventured into India, a vast and untapped market with significant growth potential. The company’s debut in the country comes amidst challenging circumstances, including a decline in sales and political complexities surrounding CEO Elon Musk.

Tesla inaugurated its first showroom in Mumbai on Tuesday, marking a strategic move to revitalize its sales figures. With India being the third-largest automotive market globally, penetrating this sector could prove instrumental in bolstering Tesla’s global sales performance.

As per the company’s website, the price of a Model Y in India stands at approximately 61,07,190 rupees, equivalent to around $71,000. In contrast, the same model is listed on the US site for roughly $45,000 before factoring in a $7,500 federal tax credit for electric vehicles (EV), bringing the cost down to $37,500. It should be noted that this tax credit is set to expire at the end of September.

Historically, high Indian tariffs on foreign-manufactured automobiles have served as a significant impediment, according to both the World Trade Organization and Tesla executives. CFO Vaibhav Taneja acknowledged the challenges during a call with investors in April, stating, “We’ve been working on getting into India… It will be a great market to enter because India has a big middle class.” However, he also admitted that these tariffs “create a little bit of tension, which we’re trying to work around.”

India’s automotive market has been instrumental in Tesla’s overall sales slump, with the company experiencing its largest sales decline in history. This downturn can be attributed to increased competition and a backlash in certain markets against CEO Elon Musk’s political activities.

Currently, nearly half of Tesla’s sales revenue is generated within the United States, while over 20% comes from China. The remaining 30% is derived from other countries.

Recent trade talks between the United States and India have shown potential for the elimination of Indian tariffs on US imports as part of a deal to prevent the imposition of steep tariffs on all Indian exports to the United States. However, no preliminary agreement has been reached as of yet.

Tesla faces stiff competition not only from established automakers that have expanded their electric offerings but also from Chinese EV manufacturers. In fact, Tesla is at risk of relinquishing its title as the world’s leading EV manufacturer to Chinese automaker BYD, despite BYD’s inability to sell within the United States.

Recent departures among Tesla’s sales executives have added to the company’s challenges. According to reports by the Wall Street Journal on Tuesday, Troy Jones, Tesla’s vice president of sales and service, has left the company. The report was based on sources familiar with the matter. Tesla did not respond to a request for comment regarding this development.

In the meantime, Tesla executives have expressed aspirations to establish a plant in India; however, the company’s existing plants in the United States, China, and Germany currently exceed demand for their vehicles. Plans for another plant in Mexico are currently on hold.