Tesla Arrives In India — But Why Analysts Think Mahindra & Mahindra, Tata Motors Can Relax For Now

Tesla has officially entered India with the launch of the Model Y, marking a long-awaited move that has sparked excitement across the automotive and investment worlds. But while the American EV giant’s sleek electric SUV now adorns showrooms in Mumbai, leading brokerages are united in their view: the impact on domestic automakers is minimal, for now.

Priced between Rs 60 lakh and Rs 70 lakh (ex-showroom), the fully imported Model Y arrives with a steep premium due to India’s high import duties. Brokerages agree this luxury positioning limits Tesla's immediate competitive threat to mass-market EV players like Mahindra, Tata, and Maruti. However, the market dynamic could significantly shift if Tesla starts local manufacturing or trade deals slash duties.

Citi analysts see Tesla's India entry as a symbolic and strategic move but with limited short-term disruption.

“At the current price point, we don’t think there would be much shift of potential Mahindra XEV 9E customers,” Citi said. “The products vary significantly, and target customer segments also do not overlap.”

Citi also flagged Tesla’s potential to shake things up in the future: “If duties are reduced or if local manufacturing starts, competition could escalate for the Indian OEMs.”

The brokerage emphasised that while specifications may be comparable to other EVs on paper, brand perception and the luxury aura Tesla brings will play a large role.

“Perception (and eventual demand) goes beyond just numbers and is a confluence of various factors, many of them non-quantifiable—brand image, road presence, after-sales service, and ease of charging availability.”

Morgan Stanley took a macro lens, pointing out that Tesla is targeting a niche slice of India’s auto market.

“The total addressable market for cars priced above Rs 50 lakh is around 50,000 units—about 1% of the total market,” it noted.

India’s average car selling price (ASP) is a modest Rs 12 lakh, making Tesla’s Model Y—which costs 55–60% more than its U.S. equivalent—a high-end outlier.

“With Tesla's high ASP and gradual ramp-up, we see limited impact on domestic OEMs.”

However, the firm is closely watching potential game changers. “The key to watch is Tesla’s ramp-up plans—launch of more affordable models and expansion of its distribution network. Trade deals such as US-India and EU-India could also be pivotal.”

In a more colourful take, Bernstein hailed Tesla’s arrival but emphasised the long road ahead. “Dear Elon Musk—Thank you for launching Tesla in India,” their flash note began, reflecting a sentiment long held by India’s policymakers.

Bernstein sees Tesla’s current move as brand-building rather than a volume play. “By launching the Model Y (not the cheaper Model 3) at a luxury price point, Tesla is clearly focusing on building brand and not mainstream volumes," the note said.

Despite this, they hinted at future disruptions: “Even if duties drop to 0–2%, Tesla’s lowest-range EVs would still be over 30% more expensive than Mahindra’s top-end EVs.”

Still, Bernstein sees the symbolic value and believes, “Tesla’s presence could spark real competition, talent development, and industry know-how—much as Bajaj and TVS did when Ola Electric launched its bikes.”

Macquarie echoed the general sentiment that Tesla’s current strategy poses no immediate threat. “Tesla's entry price does not pose volume risk for M\&M and Tata Motors given the price differential.”

It also provided a comparative perspective, stating, “Tesla’s Model Y is priced at $65–75K in India vs $40–45K in the U.S. and China—reflecting 60–100% import duties.”

However, Macquarie is watching the market closely for signals of a shift. It stated, “Tesla’s pricing strategy, ramp-up of distribution network, and India’s auto policy are key variables to track.”

Macquarie also highlighted the broader context and said, “While the share of premium-priced cars in India remains below 2%, consumer shift towards premiumization and BEV adoption lends a compelling long-term growth opportunity.”

It reiterated its positive stance on local players, saying, “We continue to prefer Mahindra and Mahindra Ltd. and TVS Ltd. as our top picks in India Auto."