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Tesla’s ‘challenges’ with India gov’t halt potential rescue of $27B manufacturing initiative
In 2014 when Narendra Modi officially became Prime Minister of India, his first message to people around the world was that, under his leadership, Indian manufacturing operations would become one of the world’s most robust. In September of the same year, Modi officially launched “Make In India,” a government initiative that encouraged companies from all corners of the globe to develop, produce, and assemble products in India with sizeable investments into manufacturing.
Five years after the initiative began, India’s manufacturing GDP was the lowest it had been in twenty years. It dropped 1.2% in the first five years following the launch of Make In India, although the growth rate of manufacturing globally increased 6.9% from 2014-15 to 2019-20.
Seven-and-a-half years later, Make In India is still a work in progress.
It was a disappointing start to the still active program, which has not been a complete failure. General Motors brought a $1 billion investment to a manufacturing facility in Maharashtra, the city where Tesla has been rumored to land with a potential factory of its own. Kia invested $1.1 billion in 2017 and has been producing vehicles at its factory in the Anantapur District since January 2019. Electrification, where the global automotive industry is heading, is still a weak point in India. Less than 1% of the country’s cars are electric.
Because of the extensive and massive $27 billion budget that has been set aside for these programs, India has tried to persuade companies to bring manufacturing to the country directly. With a sky-bound budget and thirst for local manufacturing, the confusion begins to set in: Why is Tesla, a company with a reputation for building the world’s best electric vehicles, that could likely build a manufacturing facility anywhere in the world, having so much trouble landing a deal in India to manufacture its vehicles?
A Tesla Model 3 testing in India (Credit: pune_exotics | Instagram)
The disconnect seems to be between Tesla’s requests and India’s needs. When Elon Musk, Tesla’s CEO, tweeted last night that there were still “challenges” when working with the Indian government, which had put the plans on hold once again, it seemed that the automaker’s requests for import duty reductions went to the wayside. An issue that seems to be Tesla’s most integral wish, import duty reduction has received support from some Indian politicians, noting that demand testing, which has been one key factor in the company’s attempts to enter India, cannot happen if duties are too high. “If they have to manufacture here, they need the numbers, and no one can test the market when you impose such high import duty on the vehicles,” Union Road Transport Minister Nitin Gadkari said in August.
If import taxation was not an issue, Tesla could use data already available to them to determine whether a Gigafactory would make sense in India. Spoiler alert: Tesla would never build a factory in India based on sales figures from the past ten years as very few people can afford them when import duties are involved. Any vehicle below $40,000 is subjected to 40% tax. Any vehicle more expensive than $40,000 receives a 100% tax, effectively doubling the price of the vehicle. Currently, Tesla has no vehicles in its lineup that are under the $40,000 price threshold.
The problem is those import duties are a huge issue. India seems to be against doing it, at least for now, even though the massive $27 billion budget would not be directly affected by an import tax rollback. In fact, that budget could still factor in tax losses from duty reductions. Perhaps the reasons linked to Tesla’s delayed entrance into India could be linked to the automaker’s lack of need for other companies due to its vertical integration. While this sounds far-fetched, the President of the Automotive Component Manufacturers Association (ACMA) said that localization is always a priority, and companies entering the market need to promote local manufacturing across the board, not just with the final product.
This would include everything from complex factors like semiconductors to other elements that are as simple as car seats. Tesla makes many of its parts in-house, including some microcontrollers and its automotive seats. “Tesla is absurdly vertically integrated compared to other auto companies or basically almost any company. We have a massive amount of internal manufacturing technology that we built ourselves,” Musk said in late 2020. “This makes it quite difficult to copy Tesla, which we’re not actually all that opposed to people copying us because you can’t do catalog engineering. You can’t just [say] I’ll pick up the supplier catalog, I’ll get one of those.”
This leaves India at a crossroads because, while Tesla would be a great benefit to the economy, manufacturing efforts, and employment, the company would not have as much to offer other sectors and companies as an automaker that is less vertically integrated. Reports have indicated that Tesla was planning to source components from local suppliers, but details regarding these rumors were slim.
India Prime Minister Narendra Modi visits the Tesla Fremont Factory in 2015.
But Tesla is far from a liability for any region. After launching Gigafactory Shanghai in China in early 2020, the factory has become Tesla’s biggest producer of EVs and accounted for nearly 52% of the automaker’s total deliveries for 2021. Despite the company’s vertical integration, which has increased gross margin on some Made-in-China Tesla vehicles to nearly 40%, the company has provided China with many economic benefits. The site will soon employ 9,000 people on the Model Y line alone after a confirmed expansion found in Tesla’s Environmental Impact Assessment for 2021. Gigafactory Shanghai will have 18,000 employees by the time the line expansion is completed. Additionally, it has helped encourage the adoption of EVs in Europe through exports, making the Model 3 the best-selling EV on the continent in 2021, with over 109,670 units sold. The next closest was the Renault Zoe, with 58,242 sales.
Whether Tesla will ever enter India seems to be a question that has no definitive answer currently. However, Tesla has been teasing a potential entrance for seven years, ever since Modi visited the Fremont factory in 2015. The long saga of Tesla and India will continue for now. With Tesla’s attractive status as an EV powerhouse, other countries might come knocking on the door, stealing an opportunity to increase India’s slumping reputation as a manufacturing hub. Considering the Made In India initiative’s backtrack in manufacturing GDP, perhaps new strategies should be tested.
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Tesla has officially launched public Robotaxi rides in Austin, Texas, without a Safety Monitor in the vehicle, marking the first time the company has removed anyone from the vehicle other than the rider.
The Safety Monitor has been present in Tesla Robotaxis in Austin since its launch last June, maintaining safety for passengers and other vehicles, and was placed in the passenger’s seat.
Tesla planned to remove the Safety Monitor at the end of 2025, but it was not quite ready to do so. Now, in January, riders are officially reporting that they are able to hail a ride from a Model Y Robotaxi without anyone in the vehicle:
I am in a robotaxi without safety monitor pic.twitter.com/fzHu385oIb
— TSLA99T (@Tsla99T) January 22, 2026
Tesla started testing this internally late last year and had several employees show that they were riding in the vehicle without anyone else there to intervene in case of an emergency.
Tesla has now expanded that program to the public. It is not active in the entire fleet, but there are a “few unsupervised vehicles mixed in with the broader robotaxi fleet with safety monitors,” Ashok Elluswamy said:
Robotaxi rides without any safety monitors are now publicly available in Austin.
Starting with a few unsupervised vehicles mixed in with the broader robotaxi fleet with safety monitors, and the ratio will increase over time. https://t.co/ShMpZjefwB
— Ashok Elluswamy (@aelluswamy) January 22, 2026
Tesla Robotaxi goes driverless as Musk confirms Safety Monitor removal testing
The Robotaxi program also operates in the California Bay Area, where the fleet is much larger, but Safety Monitors are placed in the driver’s seat and utilize Full Self-Driving, so it is essentially the same as an Uber driver using a Tesla with FSD.
In Austin, the removal of Safety Monitors marks a substantial achievement for Tesla moving forward. Now that it has enough confidence to remove Safety Monitors from Robotaxis altogether, there are nearly unlimited options for the company in terms of expansion.
While it is hoping to launch the ride-hailing service in more cities across the U.S. this year, this is a much larger development than expansion, at least for now, as it is the first time it is performing driverless rides in Robotaxi anywhere in the world for the public to enjoy.
Tesla has scheduled its Earnings Call for Q4 and Full Year 2025 for next Wednesday, January 28, at 5:30 p.m. EST, and investors are already preparing to get some answers from executives regarding a wide variety of topics.
The company accepts several questions from retail investors through the platform Say, which then allows shareholders to vote on the best questions.
Tesla does not answer anything regarding future product releases, but they are willing to shed light on current timelines, progress of certain projects, and other plans.
There are five questions that range over a variety of topics, including SpaceX, Full Self-Driving, Robotaxi, and Optimus, which are currently in the lead to be asked and potentially answered by Elon Musk and other Tesla executives:
- You once said: Loyalty deserves loyalty. Will long-term Tesla shareholders still be prioritized if SpaceX does an IPO?
- Our Take – With a lot of speculation regarding an incoming SpaceX IPO, Tesla investors, especially long-term ones, should be able to benefit from an early opportunity to purchase shares. This has been discussed endlessly over the past year, and we must be getting close to it.
- When is FSD going to be 100% unsupervised?
- Our Take – Musk said today that this is essentially a solved problem, and it could be available in the U.S. by the end of this year.
- What is the current bottleneck to increase Robotaxi deployment & personal use unsupervised FSD? The safety/performance of the most recent models or people to monitor robots, robotaxis, in-car, or remotely? Or something else?
- Our Take – The bottleneck seems to be based on data, which Musk said Tesla needs 10 billion miles of data to achieve unsupervised FSD. Once that happens, regulatory issues will be what hold things up from moving forward.
- Regarding Optimus, could you share the current number of units deployed in Tesla factories and actively performing production tasks? What specific roles or operations are they handling, and how has their integration impacted factory efficiency or output?
- Our Take – Optimus is going to have a larger role in factories moving forward, and later this year, they will have larger responsibilities.
- Can you please tie purchased FSD to our owner accounts vs. locked to the car? This will help us enjoy it in any Tesla we drive/buy and reward us for hanging in so long, some of us since 2017.
- Our Take – This is a good one and should get us some additional information on the FSD transfer plans and Subscription-only model that Tesla will adopt soon.
Tesla will have its Earnings Call on Wednesday, January 28.
Elon Musk shared an incredible detail about Tesla Cybercab’s potential efficiency, as the company has hinted in the past that it could be one of the most affordable vehicles to operate from a per-mile basis.
ARK Invest released a report recently that shed some light on the potential incremental cost per mile of various Robotaxis that will be available on the market in the coming years.
The Cybercab, which is detailed for the year 2030, has an exceptionally low cost of operation, which is something Tesla revealed when it unveiled the vehicle a year and a half ago at the “We, Robot” event in Los Angeles.
Musk said on numerous occasions that Tesla plans to hit the $0.20 cents per mile mark with the Cybercab, describing a “clear path” to achieving that figure and emphasizing it is the “full considered” cost, which would include energy, maintenance, cleaning, depreciation, and insurance.
Probably true
— Elon Musk (@elonmusk) January 22, 2026
ARK’s report showed that the Cybercab would be roughly half the cost of the Waymo 6th Gen Robotaxi in 2030, as that would come in at around $0.40 per mile all in. Cybercab, at scale, would be at $0.20.
Credit: ARK Invest
This would be a dramatic decrease in the cost of operation for Tesla, and the savings would then be passed on to customers who choose to utilize the ride-sharing service for their own transportation needs.
The U.S. average cost of new vehicle ownership is about $0.77 per mile, according to AAA. Meanwhile, Uber and Lyft rideshares often cost between $1 and $4 per mile, while Waymo can cost between $0.60 and $1 or more per mile, according to some estimates.
Tesla’s engineering has been the true driver of these cost efficiencies, and its focus on creating a vehicle that is as cost-effective to operate as possible is truly going to pay off as the vehicle begins to scale. Tesla wants to get the Cybercab to about 5.5-6 miles per kWh, which has been discussed with prototypes.
Additionally, fewer parts due to the umboxed manufacturing process, a lower initial cost, and eliminating the need to pay humans for their labor would also contribute to a cheaper operational cost overall. While aspirational, all of the ingredients for this to be a real goal are there.
It may take some time as Tesla needs to hammer the manufacturing processes, and Musk has said there will be growing pains early. This week, he said regarding the early production efforts:
“…initial production is always very slow and follows an S-curve. The speed of production ramp is inversely proportionate to how many new parts and steps there are. For Cybercab and Optimus, almost everything is new, so the early production rate will be agonizingly slow, but eventually end up being insanely fast.”
BREAKING: Tesla launches public Robotaxi rides in Austin with no Safety Monitor
Tesla Earnings Call: Top 5 questions investors are asking
