Electric vehicle (EV) giant Tesla’s TSLA highly anticipated entry into the Indian market with its Model Y SUV has encountered notable headwinds, prompting the company to offer targeted discounts to clear excess inventory.
After launching in mid-2025, Tesla imported roughly 300 Model Y units to India, with nearly one- third of these SUVs remaining unsold months later. To address the inventory buildup, Tesla is offering discounts of up to Rs 2 lakh ($2,200) on select Model Y variants. These incentives are not part of a broad promotional campaign but are selectively extended to specific customers or test-drive participants, signaling a tactical, inventory-driven approach rather than a sweeping price cut.
The Model Y carries a steep price tag of approximately Rs60-Rs68 lakhs ex-showroom, largely due to India’s 110% import tariff on completely built units (CBUs). These elevated costs have placed Tesla at a disadvantage compared with competitors that offer locally assembled vehicles or lower-priced alternatives.
Media and industry reports suggest that only about 227 Tesla vehicles were registered in India throughout 2025, despite earlier expectations of nearly 600 bookings. A significant number of early reservations were canceled, contributing to the current inventory overhang, while muted demand led by high pricing — starting near US$70,000 after import duties — and more affordable offerings from rival brands have further weighed on sales momentum.
Tesla’s pricing challenge is compounded by import tariffs of up to 110% on vehicles priced above US$40,000, pushing the Model Y firmly into a premium bracket. At this level, many Indian buyers perceive the imported electric SUV as prohibitively expensive.
The company’s cautious strategy extends beyond pricing. Tesla currently has no plan to manufacture vehicles locally and continues to rely on imports despite the higher levies. Instead, it is pursuing a “retail-first” strategy, expanding showrooms and service hubs in Mumbai, Delhi, and Gurugram, while also building its Supercharger and destination charging network.
This approach persists even as the Indian government encourages local manufacturing, including offering a reduced 15% tariff for automakers that commit to setting up production within three years. Despite these incentives, Tesla has no immediate plans to manufacture in India.
Meanwhile, competition is intensifying as legacy automakers and global EV brands expand their India portfolios with more affordable, locally assembled offerings, further diminishing the appeal of the tariff-heavy Model Y for aspirational buyers.
Competitive Context
China’s largest automaker, BYD Co. BYDDY, continues strong growth in India and globally. BYD India has achieved a significant milestone by crossing 10,000 electric vehicle deliveries nationwide, underscoring its rapid acceptance in the Indian EV market. The company’s portfolio, which includes the Sealion 7, Atto 3, eMAX 7 and Seal models, has helped BYD establish a broader footprint across segments from mid-range to premium EVs. BYD has built a network of 44 dealerships and offers after-sales support, roadside assistance, and charging partnerships to enhance customer experience.
Mercedes-Benz Group AGMBGYY is strengthening its electric vehicle presence despite broader market headwinds in India. In 2025, the company posted its highest annual revenue to date, selling approximately 19,000 cars, while battery electric vehicle (BEV) sales grew about 12% year over year, driven by premium models such as the EQS SUV Celebration Edition and others. To sustain momentum, Mercedes plans to broaden its EV lineup with new model launches in 2026.
The Zacks Rundown on TSLA Stock
Shares of TSLA have gained 36.6% in the past six months compared with the industry’s growth of 39.3%.
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From a valuation standpoint, TSLA trades at a forward price-to-sales ratio of 13.85, above the industry and its own five-year average. It carries a Value Score of F.
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See how the Zacks Consensus Estimate for TSLA’s earnings has been revised over the past 90 days.
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Tesla stock currently carries a Zacks Rank #4 (Sell).
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
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This article originally published on Zacks Investment Research (zacks.com).
