It’s an early sign of challenges as Tesla tries to crack the world’s third-largest passenger car market with one of its cheaper entry-level models. The automaker, which debuted in India in July, has relied on the strength of its brand to boost sales despite local duties reaching 110% on imported cars.
Tesla did not respond to an emailed request for comment on India discounts and inventory build-up. The tepid debut in India comes at a time when the company is seeing faltering global demand. Global sales fell for the second consecutive year in 2025, leaving the company behind China’s BYD Co. came to be known as the bestseller of electric vehicles.
Increasing competition and declining subsidies in some markets have eroded Tesla’s share in the US, Europe and China. In India, car buyers are yet to fully embrace the brand due to its limited visibility and high prices. The company hired former Lamborghini India head Sharad Agarwal in November to head its local operations to lure luxury car buyers.
After test drives, some potential customers opt for alternatives that are cheaper, like BMW’s entry-level luxury EV iX1, or packed with more features like BYD Co.’s Sealion 7. Both will start at lower prices than Tesla’s Model Y in India. The discount offers apply to select Model Y Standard Range vehicles shipped last year and are only offered directly to customers and test drive seekers, rather than as a formal nationwide promotion, the people said.
Tesla currently sells the Model Y only in India at a starting price of nearly $70,000, competing with established luxury car makers in the country.
The EV maker received only about 600 bookings for the Model Y in India, Bloomberg reported in September. A significant portion of those orders have yet to be converted into deliveries, the people said. The company shipped as many as 500 cars to India last year, with the first arriving from Shanghai in early September.
Demand signals
According to India’s official vehicle registration data, Tesla registered just 227 cars in the country in all of 2025, highlighting the gap between early demand signals and actual sales.
Many buyers who initially put down a down payment are now reluctant to buy the cheaper, shorter-range Model Y, the people said. While other customers have expressed interest in a higher-priced variant with a longer range, deliveries of that model have also been slower than expected, they said, which has helped stock build-up.
The company had hesitated to enter the Indian market for almost a decade, but finally decided to do so a few months after Musk met Indian Prime Minister Narendra Modi in the US in February.
Tesla’s slow start in India contrasts with the relatively robust growth in India for some of its global competitors.
BMW AG’s Indian unit saw sales jump nearly 200% last year to about 3,700 vehicles thanks to the locally assembled iX1 model, Hardeep Singh Brar, the company’s head of India, said in an interview this month.
The German automaker, which sells its electric cars at an average price close to that of the Model Y, is also increasing the share of its sales from electric models, Brar said.
China’s BYD has also gained market share by offering a wider range of price points and working with local partners. Registrations in India increased by 88% last year to more than 5,400 cars.
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