Tesla is reportedly offering discounts on unsold Model Y inventory in India as the automaker faces a “letdown” in the major auto market following its official launch last year.
We have been covering Tesla’s efforts to enter the Indian auto market for years now. It has been a saga of lobbying for lower import duties, rumors of a local factory, and abandoned plans.
The situation finally changed last year when Tesla officially launched in the country, but as we noted at the time, it did so at a price that “didn’t make sense.”
Instead of taking advantage of a new government scheme that would have lowered import tariffs in exchange for a commitment to local manufacturing, Tesla chose to do it alone, importing all vehicles.
This resulted in the Model Y starting at nearly $70,000 in India due to import duties as high as 110%.
Now, a new report from Bloomberg states that the automaker is already offering discounts to clear inventory.
According to the report, Tesla is offering discounts of up to ₹200,000 (~$2,200 USD) on unsold Model Y SUVs.
The report claims that Tesla imported about 300 vehicles to India, but roughly 100 of them remain unsold after early reservation holders canceled their orders.
This aligns with previous reports that Tesla received just 600 orders for the vehicle in the massive market, a number that fell short of even modest expectations.
Sales have been extremely slow. We reported in November that Tesla had sold only about 100 cars in the months following its launch.
The discounts are reportedly being offered on the unsold inventory from that initial batch of imports.
Electrek’s Take
I hate to say “I told you so,” but I literally wrote an article titled “Tesla finally launches in India, but at a price that doesn’t make sense” when they announced the pricing.
It was obvious that this was going to happen. You simply cannot sell a car that costs $40,000 in the US for $70,000 in India and expect high volume. The addressable market at that price point in India is microscopic.
Top comment by arnold edgar
There's a lot of people in India who'd buy a $70,000 for their third kid, the one they don't like that much. The trouble isn't the market but the product - it's not that it's expensive but that it's not competitive. They can get BYD in India and anywhere BYD and Tesla can meet on an even field, Tesla will lose.
What is frustrating is that there was a path for Tesla to succeed here. The Indian government offered a clear compromise: commit to building a factory, and we will slash import duties on your imported cars while you build it.
Tesla decided not to take that deal because it is already overcapacity in production relative to demand.
It’s unclear what’s going to happen here. Tesla invested a bit in infrastructure, including service centers and Superchargers in India, it is not sustainable at these rates.
I’m assuming that Tesla continues operating at this scale while lobbying the government to change its rules; otherwise, there’s no way it can scale without local manufacturing, something it clearly doesn’t seem to want to do.
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