The decision to prioritize existing factories for vehicle production signals a departure from Tesla’s previous intentions of establishing new manufacturing lines.
Tesla May Not Come To India Anytime Soon; Here’s Why Elon Musk Led Company May Face Delays (Image source: Times Now Digital)
Tesla, under the leadership of Elon Musk, has announced a shift in its production strategy. Instead of investing in new factories in Mexico and India, the company will utilize its current facilities to manufacture new and more affordable vehicles. This move, aimed at increasing production efficiency, could commence as early as the end of this year, according to a Reuters report.
Tesla Expansion Plans Deferred
The decision to prioritize existing factories for vehicle production signals a departure from Tesla’s previous intentions of establishing new manufacturing lines. The company, known as the world’s leading Electric Vehicle (EV) manufacturer, plans to boost production by 50 per cent from 2023 to nearly 3 million vehicles before considering investments in new facilities.
While this strategic update may result in achieving less cost reduction than previously anticipated, Tesla views it as a prudent approach to navigate uncertain market conditions. The company aims to grow its vehicle volumes in a more capital-efficient manner amidst challenging times, as stated in its official statement.
Market Response and Investor Sentiment
Investors have reacted positively to Tesla’s decision, with the company’s shares surging 12 per cent in after-hour trading. Elliot Johnson, Chief Investment Officer at Evolve ETFs, expressed optimism about the move, highlighting the importance of adapting to market challenges while expanding the existing product line.
Tesla Focus on Affordable Models
Tesla discussed plans for unidentified new models, distinct from the previously reported Model 2 expected to be priced at $25,000. This more affordable vehicle aims to drive Tesla’s growth into a mass-market automaker, with CEO Elon Musk targeting a launch by the latter half of 2025.
Tesla’s Head of Engineering, Lars Moravy, emphasized the inherent risks associated with new manufacturing processes and production lines. The company has opted to leverage its existing facilities to swiftly and efficiently produce low-cost vehicles for the time being.
Despite earlier anticipation, Elon Musk’s meeting with Indian Prime Minister Narendra Modi to announce investments in an auto factory was cancelled at the last moment. Musk cited pressing Tesla obligations, intending to reschedule the visit for a later date. Additionally, Tesla has not responded to inquiries regarding its plans in Mexico and India.
Tesla may face in expanding capacity amid expectations of slowing sales after years of robust growth rates. While Tesla acknowledges the potential slowdown in vehicle volume growth, Elon Musk remains optimistic about sales prospects, affirming a positive outlook during a recent conference call.
