Tesla (TSLA, Financials) began refunding early reservation deposits for its Model 3 sedan in India, signaling a possible relaunch in the market, according to a Bloomberg report.

The refunds apply to customers who placed bookings in 2016 as the company phases out the earlier generation of the Model 3. In emails sent to customers, Tesla said it would return reservation fees and would contact them again when it finalizes its offerings for the Indian market.

The development comes as Tesla Chief Executive Officer Elon Musk recently announced plans to visit India later this year. The timing coincides with ongoing trade discussions between India and the United States, which could lead to lower tariffs on imported automobiles.

A reduction in tariffs could make Tesla’s vehicles more affordable in India and reshape its strategy for entering the world's third-largest auto market. India's growing affluent middle class presents a sizable opportunity for premium electric vehicles, although Tesla’s entry could put pressure on domestic carmakers.

Tesla’s renewed interest in India follows a challenging year for the electric vehicle maker. Global vehicle deliveries declined in 2024 for the first time in more than a decade amid rising competition, particularly from China's BYD Co.

Facing slowing growth in key markets, Tesla is seeking to expand into new regions to offset competitive pressures and soften the impact of declining demand elsewhere, according to Bloomberg.