Tesla Abandons Plans to Build Factory in India Amid Tariff Dispute and Infrastructure Hurdles

[Global Update] Tesla has officially scrapped its plan to build a factory in India, ending five years of negotiations without success.

Core Development: Tesla Exits Due to Conflict Between Tariffs and Market Realities

India imposes import tariffs of 70% to 100% on electric vehicles, driving the price of the Model Y above RMB 400,000. Sales for the entire year of 2025 totaled only 227 units. Indian authorities demanded that Tesla first commit to a USD 500 million investment and achieve a high level of local production, but Tesla insisted on “lower tariffs first, then build the factory,” leading to a deadlock.

Strategic Foundation: Supply Chain Gaps Heighten Investment Risks

Local content for core EV components in India remains below 15%, battery costs are 41% higher than in China, the country has fewer than 5,000 public charging stations, and some regions experience power outages averaging 3 hours per day, making it difficult to support capital-intensive operations.

Industry Impact: "Market-for-Technology" Strategy Suffers Short-Term Setback

Tesla’s stock closed down 2.90% on May 18, with trading volume reaching USD 21.258 billion, reflecting investor concerns over obstacles in expanding into emerging markets.