It is unlikely that Tesla would make investments in new plants in Mexico or India anytime soon because the company has stated that it will use its current facilities to produce new, more inexpensive vehicles as early as late this year.

The leading electric vehicle manufacturer in the world stated that before investing in new production lines, it intends to increase output by 50% from 2023 to its present capacity of about 3 million vehicles.

“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 business stated.

Despite the company’s quarterly results falling short of financial expectations, investors applauded Tesla’s choice to forgo the risks of producing new models in new facilities, as evidenced by the 12% increase in Tesla shares during after-hours trading.

“It’s encouraging that he’s not blindly pursuing his expansion plan, disregarding market obstacles and the fact that he’s producing a more affordable vehicle from the current lineup,” stated Elliot Johnson, chief investment officer of Evolve ETFs, an investment management firm that oversees close to $6 billion in assets, some of which are invested in Tesla and other electric vehicle manufacturers.

On April 5, Reuters revealed exclusively that Tesla had abandoned its ambitions to introduce the Model 2, a low-cost car that it intended to manufacture in Texas, Mexico, and a third nation.

It was anticipated that the Model 2 would set Tesla’s trajectory towards becoming a mass-market vehicle and cost $25,000.

In response to the Reuters story, Musk said on X that “Reuters is lying.” He refrained from providing specifics, and he avoided explicitly addressing the Reuters report on Tuesday.

Rather, Tesla talked about unnamed new models that seemed to be distinct items.

In January, Musk stated that Tesla planned to release the new, less expensive model in the second half of 2025. He also mentioned that the model will have “revolutionary manufacturing technology” and lead to the company’s next phase of expansion.

However, new production lines and manufacturing methods come with “some risks,” according to Tesla’s chief of engineering Lars Moravy, who stated on Tuesday. As a result, the manufacturer made a “major shift” to use its facilities to quickly and efficiently build low-cost vehicles.

(Adapted from BusinessToday.in)

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