Tesla shares: What could be the impact of Elon Musk's EV launch in Indian market?

Tesla Inc.’s long-anticipated foray into the Indian electric vehicle (EV) market is finally taking shape, and market observers are closely evaluating how this move could influence Tesla’s stock performance. With Elon Musk’s visit to India expected later this year and talks around setting up a manufacturing facility and sourcing partnerships underway, Tesla’s India entry could mark a critical milestone for both the company’s global expansion and India's EV transition journey.

Tesla’s India Ambitions Gaining Momentum

After years of speculation and negotiation hurdles, Tesla appears to be making serious headway in entering the Indian automotive landscape. As per reports, the company is exploring the possibility of setting up a manufacturing plant in Gujarat or Maharashtra with an investment that could exceed $2 billion. Government officials have also hinted at potential policy relaxations and import duty incentives to facilitate Tesla’s initial operations.

Tesla is also reportedly working to develop a robust local supply chain and may collaborate with Indian auto component suppliers. The company aims to introduce its affordable EV model—expected to be priced around ₹20-25 lakh—tailored for Indian roads and customer expectations.

“Tesla’s entry could be a game-changer, not just for the company but for India’s EV sector. It would enhance competition, push local innovation, and expedite infrastructure development,” said Saurabh Jain, Vice President at SMC Global Securities.

Impact on Tesla’s Global Growth and Share Price

Tesla shares have seen increased volatility in 2024 amid global competition, rising interest rates, and margin pressures. However, analysts believe the India entry could reignite investor optimism.

India represents a vast, under-penetrated market with rapidly rising EV adoption, fueled by favorable policies and growing environmental awareness. Currently, EVs account for just over 2% of India's car sales, offering Tesla immense headroom for growth.

“If Tesla manages to capture even a 5-10% share of the Indian EV market over the next five years, it could contribute meaningfully to revenue diversification and long-term earnings,” noted Katherine Ross, Senior Equity Analyst at Morningstar.

Tesla’s expansion in India could also help mitigate risks associated with its overdependence on the U.S. and Chinese markets, both of which are witnessing intensified competition and regulatory scrutiny.

Indian Market: Opportunities and Challenges

India’s burgeoning middle class, government-backed EV incentives, and push for cleaner energy alternatives align well with Tesla’s vision. Additionally, India’s ambition to have 30% of all new vehicles electric by 2030 offers a clear roadmap for growth.

However, Tesla will need to navigate several challenges:

• Price sensitivity: The Indian market is dominated by budget-conscious buyers, with most EVs priced under ₹15 lakh.

• Charging infrastructure: Although improving, EV infrastructure in India is still in its infancy, especially in Tier-2 and Tier-3 cities.

• Local competition: Domestic players like Tata Motors, Mahindra Electric, and startups like Ola Electric have already built a strong presence with more affordable offerings.

“Tesla must localize production, adapt to Indian consumer behavior, and compete on price to succeed. The brand power is strong, but affordability and service accessibility will be decisive,” said Ramesh Srivastava, auto sector analyst at Motilal Oswal Financial Services.

Investor Sentiment and Shareholder Perspective

Tesla’s entry into India is being viewed as a long-term strategic move. While it may not deliver immediate bottom-line results, the positive sentiment it generates among investors could provide a cushion for the stock in a turbulent macroeconomic environment.

On the Nasdaq, Tesla shares closed at $266.48 on July 15, posting a 1.4% weekly gain as anticipation around international expansion builds. Analysts are divided on near-term stock movement, with some pointing to lingering concerns over delivery growth and pricing pressures in existing markets.

Nonetheless, fund managers see merit in holding Tesla shares for the long haul.

“India is the next frontier. A successful rollout here could mirror the early impact Tesla had in China in 2020–21. That alone makes the stock a compelling story for patient investors,” commented Anita Pal, Fund Manager at Axis Global Opportunities Fund.

Outlook for Tesla in India and the Broader Market

With the government’s support for EV manufacturing, the Production-Linked Incentive (PLI) schemes, and rising oil prices nudging consumers towards electric alternatives, Tesla’s India timing looks opportune. However, a successful India play will depend on its ability to blend global standards with local expectations.

If Tesla follows through with affordable EV offerings, localized production, and robust service support, it could not only secure a strong foothold in India but also influence broader sectoral trends—from battery localization to tech innovation.

Tesla’s India launch is more than just a geographical expansion—it’s a strategic pivot to capture untapped potential in one of the world’s fastest-growing automotive markets. For investors, this move opens a fresh chapter in Tesla’s growth story. While execution risks remain, the upside—if realized—could be significant, both for the company and shareholders worldwide.