SAN FRANCISCO (Reuters) -Tesla said on Tuesday it will use its existing factories to build new and more affordable vehicles as early as the end of this year, making investments in new plants in Mexico and India unlikely in the near term.
The world’s largest EV manufacturer said it plans to increase production by 50% from 2023 to its current capacity of almost 3 million vehicles, before investing in new production lines.
“This update may result in realizing less cost savings than previously expected, but will allow us to cautiously grow our vehicle volumes in a more capex-efficient manner during uncertain times,” the company said.
Investors cheered the decision not to take the risks of building new models in new factories, with shares of Tesla (NASDAQ:) rising 12% in after-hours trading despite the company’s quarterly results missing financial targets .
“I think it’s positive that he’s not just continuing with an expansion plan, ignoring the challenges in the market and the fact that he’s making a cheaper vehicle from the existing product line,” said Elliot Johnson, Chief Investment Officer at Evolve ETFs . which manages nearly $6 billion in assets, including investments in Tesla and other EV manufacturers.
Reuters exclusively reported on April 5 that Tesla had scrapped plans to launch its low-cost vehicle known as Model 2, which Tesla planned to build in Texas, Mexico and a third country. The Model 2 was expected to cost $25,000 and fuel Tesla’s growth into a mass-market automaker.
Musk had responded to the Reuters report with a message on X that “Reuters is lying.” He did not provide details and did not directly address the Reuters report on Tuesday.
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Instead, Tesla discussed unidentified new models that appeared to be different products.
In January, Musk said Tesla aims to deliver the cheaper new model in the second half of 2025, adding that the model will feature “revolutionary manufacturing technology” and generate the next wave of growth for Tesla.
But Lars Moravy, Tesla’s head of engineering, said Tuesday that new manufacturing processes and production lines come with “some risks,” and the automaker was making a “big change” by using its facilities to build low-cost vehicles in a fast and efficient way. way for now.
Musk was expected to meet Indian Prime Minister Narendra Modi on Monday and announce major investments in a car factory to produce a small, affordable model. Musk canceled at the last minute, citing “very heavy Tesla commitments” and said he planned to reschedule the visit for later this year.
Musk said last year that Tesla will “definitely” build its factory in Mexico, but that the timing of the factory will depend on the economy and interest rates that reduce vehicle affordability. He also said Tesla would begin the first phases of construction last year.
Tesla did not respond Tuesday to a request for comment on its plans in Mexico and India.
Analysts said it would be difficult for Tesla to expand capacity as it braces for slowing sales after years of double-digit growth. Tesla reiterated on Tuesday that car volume growth this year may be significantly lower than in 2023. Musk added during a conference call that sales would still grow compared to last year.
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Smaller competitor Rivian (NASDAQ:), known for its R1S SUVs and R1T pickup trucks, said last month it would start producing its smaller, cheaper electric R2 SUVs at its existing U.S. factory to meet deliveries in the first half of 2026. speed up. previously planned to build the R2 in a new $5 billion factory.
