Indians who prepaid $1000 for Tesla EVs seek refund; here's why

In April 2016, Elon Musk invited Indians to pre-order the Tesla Model 3, making everyone excited for the future of EVs in India. Many technology enthusiasts including the founder and CEO of health-tech startup GOQii, Vishal Gondal, willingly prepaid $1000 as a deposit, news agency AP reported.

Gondal wasn’t certain when Tesla would finally make its way to India or even how much the car would cost when it comes, but like a true Musk fan, he was willing to wait.

More than eight years later, Tesla has still not launched in India, while other automakers have launched their own EVs and are establishing market shares gradually.

Challenges hindering Tesla’s entry

According to AP’s report, one of the major concerns that Musk has regarding Tesla’s entry into Indian markets is the price: taxes would make the car very expensive in India. The automaker is also worried about establishing an Indian factory in case it decides to shift production away from China.

In India, an average car is priced at $14000, as compared to the average price of $47000 in the US, the report said. At its current rate of around $40000, Tesla would be no less than a luxury car in India, and would also have to be followed by exemplary after-sales service.

Gondal eventually moved on from Tesla and bought an electric SUV from German automaker Audi. He also managed to get a refund of his $1000 deposit in January 2023 with the help of a friend who helped him reach out to a sales manager at Tesla in India.

“I think Tesla may be a great tech company. But they just don’t know how to sell luxury cars,” Gondal said to AP.

Since then, many other automobile companies that were previously in business for selling luxurious cars have now started selling EVs in India.

Other Musk lovers who invested in Tesla early on are demanding refunds from the company. For instance, Mumbai-based design studio director Hemant Suthar got a refund for his deposit in 2023. Suthar told AP that he believes that a company like Tesla, which is more of a minimalist, cannot compete with the luxurious EVs that are now available in the Indian market.

The government in India reduced its import duties to 15% from 70-100% in March 2024 for EVs priced at less than $35,000 with the precondition that the company has to build a factory in the country within three years. This step was taken to attract international EV automakers while also protecting domestic manufacturers like Mahindra and Maruti Suzuki.

Many expected Musk to finally invest in India in April, but he ended up cancelling his trip to the country at the end moment.

Shift in global markets

In the last five years, there has been a drastic shift in the EV market, in both India and globally. While Tesla now has factories in China, Germany and the US, its sales figures are continuously declining.

Tesla has a manufacturing capacity of building 2.3 million cars annually, according to a filing to the U.S. Securities and Exchange Commission. Although the production increased by 35% to 1.85 million units in 2023, Tesla sold 831,000 vehicles in the first half of 2024, much less than Musk’s forecast of 1.8 million vehicles for the year.

Tu le, founder of the consultancy Sino Auto Insights, said to AP that the novelty of EVs has been reducing. He added that if Tesla aims to lead among the automakers globally, it needs to come up with newer and more affordable options for emerging markets like India. Local competitors like BYD are increasing competition with their affordable and premium models and are taking away Tesla’s first-mover advantage in India.

“Every market they (Tesla) enter from now on, BYD is going to be looking at their watch and saying: What took you so long?” Tu was quoted as saying by the news agency.

Notably, Tesla’s plans for India are unclear. Rajesh Kumar Singh, secretary of the Department for Promotion of Industry and Internal Trade (DPIIT), told CNBC-TV18 last month that the Tesla executive who Indian officials were in contact with lost his job and that the government is not aware about the company’s future plans.

India’s EV market is still small even though it has been continuously growing. It made up only 2% of the total car sales in the country in 2023. Tata Motors is at the top with Mahindra & Mahindra and BYD making their way to occupy bigger shares.