In a bid to explore new markets and address falling sales in its existing territories, Tesla Inc., the electric vehicle company led by Elon Musk, is inaugurating its inaugural showroom in India.

The facility, spanning 4,000 square feet, is located in Mumbai's prestigious financial district, the Bandra Kurla Complex, and is set to begin operations today. Sources suggest that the showroom may showcase Chinese-manufactured Model Y crossovers, which are expected to be priced around $56,000 before tax and insurance costs.

Without the federal tax credit, this price would be approximately $10,000 higher than the base price in the United States. A second showroom is projected to open in New Delhi by the end of July, and Tesla has ramped up local hiring and secured warehouse space.

Nonetheless, Tesla’s entry into India focuses more on gauging demand for its electric vehicles and boosting the brand's visibility rather than achieving immediate sales volume increases. The company has no plans to set up a production facility in the world's third-largest automobile market.

Jay Kale, a Mumbai-based analyst at Elara Securities says, “It's not meaningful from a volume standpoint yet. But it plants the brand. Over time, as charging infrastructure improves and the lineup expands, Tesla could scale.”

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Tesla is taking the long-awaited action as it faces challenges in its two primary markets, China and the US. After experiencing a disappointing 2024, the company is eager to avert a second consecutive year of declines following a revenue drop in the last quarter.

Due to various protectionist challenges, the American electric vehicle maker has been losing global market share to its Chinese rival, BYD Co.

While the Model Y is recognized as the top-selling electric vehicle globally, it is reported that few Indians can afford one. Luxury vehicles constitute only one percent of total car sales, and the EV penetration rate in the country remains around five percent.

Rather than competing against mass-market low-cost manufacturers like Tata Motors Ltd., Mahindra & Mahindra Ltd., and MG Motor India Pvt., Tesla will primarily be up against German luxury brands such as BMW and Mercedes-Benz Group AG.

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Musk's company has explored the possibility of establishing a local manufacturing facility, which the Indian government has supported and which could help circumvent high import tariffs. Nevertheless, Tesla has yet to make a firm commitment to this plan.