Initially, expectations were that India’s trade discussions with the U.S. might help ease prices. But the reality is quite the opposite.
Tesla’s Model Y in India Is Made in Germany—Not the U.S.
One of the key reasons for the elevated price is Tesla’s sourcing strategy. The Model Y units displayed at Tesla’s newly launched Mumbai showroom are manufactured in Germany, not the U.S.
Here’s why that matters:
-
Tesla's U.S. factories currently do not produce right-hand-drive (RHD) vehicles, which are essential for Indian roads.
-
While Tesla’s Shanghai Gigafactory does build RHD units, those are primarily exported to markets like Japan and Australia.
-
In April 2024, Tesla began RHD production at Giga Berlin, specifically to serve markets such as India.
This German origin could open the door to a more affordable Model Y in India, thanks to a different set of trade negotiations.
EU-India Free Trade Agreement Could Slash Import Duties
India currently imposes over 100% import duties on completely built-up (CBU) vehicles like the Model Y, effectively doubling their cost. However, this may soon change.
India is in advanced stages of negotiating a Free Trade Agreement (FTA) with the European Union, which could see duties on EV imports drop to as low as 10% in phases, according to a Reuters report citing official sources.
Such a move could drastically reduce prices of German-made EVs, including the Tesla Model Y, as well as vehicles from Volkswagen Group, Mercedes-Benz, and BMW.
However, Indian automakers are lobbying for a minimum 30% import duty for the next four years, arguing that lower tariffs could harm domestic EV manufacturing.
How Much Could the Price Drop?
Here’s a snapshot of Tesla Model Y pricing in Germany:
-
Base model: €44,990 (≈₹41 lakh)
-
AWD 7-seater: €57,490 (≈₹52 lakh)
-
AWD 5-seater: €54,990 (≈₹50 lakh)
If the import duty is reduced to 10%, the Indian price could drop by ₹10–15 lakh, making the Model Y far more accessible to urban EV buyers. That’s a potential game-changer for India’s growing luxury EV market.
What About Tesla Superchargers in India?
Tesla also used the Mumbai event to showcase its Supercharger network plans:
-
Seven stations are planned across Mumbai
-
More stations are expected near Delhi, where the brand will reportedly launch its second showroom
While infrastructure development is underway, the real battle is around pricing and accessibility—and that will depend heavily on trade policy.
Why the EU Trade Route Makes Sense
The EU is India’s largest goods trading partner. In FY 2023–24, bilateral trade reached:
-
$137.41 billion (≈₹11.67 lakh crore)
-
Exports: $75.92 billion (₹6.45 lakh crore)
-
Imports: $61.48 billion (₹5.23 lakh crore)
-
This deep economic relationship lends strong weight to the India-EU FTA, which may have far greater impact on Tesla’s pricing in India than any former or ongoing U.S. trade negotiations.
Final Thoughts
While the current price of ₹61 lakh may seem steep, Tesla’s long-term affordability in India could hinge on diplomacy—not design. As India and the EU inch closer to a trade agreement, EV buyers may soon find themselves within reach of one of the world’s best-selling electric SUVs—at a much more palatable price.
