Can foreign EV firms thrive in India's challenging market?

Hurdles include price-conscious consumers, limited infrastructure, high import duties

- Nirmala Ganapathy

NEW DELHI - As growth in electric vehicle (EV) sales slows down in the US and Europe, competition is accelerating in India's nascent electric car market with the entry of billionaire Elon Musk's Tesla and Asian carmakers, such as Vietnam's VinFast and China's Leapmotor.

India is the world's third-largest car market in terms of domestic vehicle sales, and it is predicted to overtake the US and China to become the largest by 2030.

The government hopes that electric cars will make up 30 per cent of total car sales by then, up from a mere 2.5 per cent out of the 4.3 million cars sold in 2024.

But India is also a challenging market with price-conscious consumers, limited charging infrastructure, difficult road conditions, and high import duties on foreign cars.

Tesla drove into the Indian market in July with two variants of its Model Y, a popular electric sport utility vehicle (SUV), which come with a hefty starting price tag of around US$70,000 (S$90,000), compared with just US$37,490 in the US, according to Forbes India.

A key reason was the import duty, which can rise to 110 per cent, making the SUV more expensive in India than in many other countries.

Tesla, which is currently operating in Mumbai and plans to expand to Delhi, is testing the market, said Mr Srihari Mulgund, India new age mobility partner at EY-Parthenon India, a consulting company.

"They are trying to see how the market perceives the product. There will be learning, and it will help them develop an India product strategy," he noted.

The government is working to expand infrastructure for charging EVs, which will be key to their acceptance. More than 12,000 EV charging stations were in use nationwide in 2024, and the government aims to have 3.9 million by 2030.

Leading up to Tesla's entry on July 15, Mr Musk had criticised the high import duties, remarking that they were "the highest in the world by far, of any large country".