NEW YORK:
Tesla on Tuesday revealed its decision to harness its current manufacturing capabilities to produce new, more cost-effective vehicles, deferring plans for investments in fresh factories in Mexico and India for the foreseeable future.
The pioneering electric vehicle (EV) manufacturer outlined its intention to boost production by 50% from 2023, aiming to scale up to nearly 3 million vehicles without venturing into new manufacturing lines just yet.
Tesla’s adjustment in strategy, as articulated by the company, may lead to slightly less cost reduction than previously anticipated. However, it positions the company to incrementally expand its vehicle volumes while navigating through uncertain market conditions in a capital-expenditure efficient manner.
“This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex-efficient manner during uncertain times,” the company said.
Investors responded positively to Tesla’s cautious approach, driving a 12% surge in Tesla shares during after-hours trading, despite the company’s quarterly results falling short of financial expectations.
While Musk previously targeted the second half of 2025 for the release of the cheaper Model 2, Lars Moravy, Tesla’s Head of Engineering, emphasised the risks associated with new manufacturing processes and production lines. This prompted a strategic pivot towards leveraging existing facilities for the production of low-cost vehicles, characterised as a “major strategy shift” by Moravy.
Despite prior indications of engaging with India’s Prime Minister Narendra Modi and announcing significant investments in an auto factory, Musk’s plans were derailed as he cited “very heavy Tesla obligations” for cancelling the meeting.
