Tesla Refunds Model 3 Reservation Fees in India as Market Entry Plans Evolve

The India office of Tesla Inc. is refunding Model 3 reservation fees in India, signalling a potential shift in its market entry strategy, Bloomberg News reported. The electric vehicle maker is refunding the years-old booking fees as the older generation of Model 3 is being discontinued, according to the report.

“We would like to return your reservation fee for the time being,” Bloomberg News cited the emails sent by Tesla to customers who had made these bookings back in 2016. “When we finalise our offerings in India, we will reach out in the market again. We hope to see you back with us once we are ready to launch and deliver in your country.”

This signals the Elon Musk-led company’s entry into the country after years of high import duty hurdles. Musk had earlier disclosed his plans of visiting India. His planned visit coincides with India-US trade negotiations that could lower automobile tariffs.

Tesla’s Chief Financial Officer Vaibhav Taneja said that the company has been actively working on entering India, but described it as "a very hard market." “…especially under the current tariff structure in India, any car we send in is subject to a 70% import duty, plus a 30% luxury tax. So the same car becomes 100% more expensive than what we sell it for elsewhere," Taneja had said during the Q1 earnings call.

Tesla’s net profit for the March quarter fell 71% on year. Automotive gross margin, excluding regulatory credits, fell to 12.5%, down from 13.6% in the previous quarter. The firm posted $19.34 billion in revenue for the first quarter of 2025. Earlier this month, Tesla revealed that vehicle deliveries fell 13% year-on-year.

Its worldwide vehicle deliveries fell last year for the first time in more than a decade, as BYD and other players continue to increase competition in the EV market, according to the Bloomberg’s report.