Tesla is cautiously navigating an entry into India, CFO Vaibhav Taneja said on Tuesday in the U.S., as the electric vehicle maker faces falling sales and tariff threats. 

Speaking on an earnings call, Taneja confirmed reports that the company is working on an expansion into India, adding that it would be a great market to enter, thanks to its “big middle class.” 

Nevertheless, India is also “a very hard market,” with EV imports into the country subject to a 70% tariff and about 30% luxury tax, he said, noting that this could make India-sold Tesla’s twice as expensive, he said. 

“That’s why we’ve been very careful trying to figure out when is the right time… these kinds of things create a little bit of tension, which we are trying to work out,” he added. 

India has signaled interest in Tesla setting up a base in the country, though the country’s protectionist policies present some obstacles for the EV maker. 

Taneja’s statements come just days after Tesla CEO Elon Musk spoke with India’s Prime Minister Narendra Modi on topics including collaboration on technology and innovation.

Modi also met with Musk during his visit to Washington, D.C., in February, fueling speculation about Tesla’s plans for India. That same month, sources told CNBC-TV18 that the company was considering importing EVs from its Berlin plant into the country as early as April.

On India’s part, the government has proposed a new policy that could see EV tariffs fall from about 70% to 15% for firms that plan to localize some manufacturing in the country.  

Still, experts have told CNBC that Tesla would face price pressures under the scheme, with the company likely to push for further policy reforms.

However, American President Donald Trump’s new tariffs placed on U.S. trading partners, including India, could cast a cloud over potential negotiations between Tesla and New Delhi. 

Washington has imposed additional tariffs of 10% on India, but these could rise by 26% if a 90-day pause on Trump’s “reciprocal tariffs” ends without a U.S.-India trade deal. 

Vice President JD Vance met with Modi in India on Monday, hailing “significant” progress made in trade talks between the two countries. 

Tesla reported disappointing first-quarter results Tuesday, including a 20% year-over-year drop in automotive revenue and a 71% slump in net income.