Tesla warns of trade war impact as it makes a strategic move into India

Tesla Inc. has raised concerns over potential retaliatory measures from other countries as global trade tensions escalate following US President Donald Trump’s recent tariff initiatives. In a letter dated 11 March to US Trade Representative Jamieson Greer, the electric vehicle (EV) manufacturer cautioned that such actions could significantly impact manufacturing costs and undermine its competitiveness in international markets.

The letter highlights the challenges faced by US exporters when other nations respond to American trade actions, pointing to past instances where targeted countries reacted with increased tariffs on imported EVs. Tesla warned that the automotive industry could face severe repercussions as supply chains become strained and vehicle prices surge.

Tesla’s chief financial officer Vaibhav Taneja had previously expressed similar concerns during a company earnings call in January. He noted that the imposition of tariffs and potential reciprocal measures could adversely affect the company’s profitability.

Tesla’s latest communication underscores the automaker’s apprehension about the EV and battery supply chain, which remains heavily reliant on foreign countries despite efforts to localise production.

As trade uncertainties loom, Tesla is also contending with a range of domestic challenges, including declining sales in key markets, a steep drop n its stock value this year, and instances of vandalism at showrooms.

In a notable backlash, the Canadian province of British Columbia has pulled government subsidies for Tesla home chargers, citing opposition to CEO Elon Musk’s association with Trump’s administration.

Amidst these challenges, Tesla is making strides in the Indian market by securing a prime location for its first showroom in Mumbai’s prestigious Bandra-Kurla Complex (BKC). The automaker has signed a lease for a 4,003-sq ft space in the Maker Maxity building, known for its high-end retail outlets and corporate offices. The lease, effective from 16 February 2025, will initially cost Rs 3.69 crore per annum, increasing by 5 per cent annually to reach approximately Rs 4.13 crore by the fifth year.

Tesla’s choice of location, near Mumbai’s international airport and key financial hubs, indicates its strategy to cater to a premium clientele. Following the Mumbai launch, the company plans to establish a second showroom at Indira Gandhi International Airport in Delhi, signalling its intent to expand its footprint in India’s rapidly growing EV market.

The company has also commenced hiring for various positions in both Mumbai and Delhi, underscoring its commitment to operational ramp-up as it navigates both global trade pressures and local expansion plans.