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April 25, 2024

Tesla Eyes Manufacturing Expansion: India and Mexico Plants Likely in 2025

Tesla, the leading electric car manufacturer, is considering setting up manufacturing plants in India and Mexico as part of its expansion plans for 2025. Elon Musk, the CEO of Tesla, announced that the company aims to produce its affordable electric car priced at $25,000 in these countries, leveraging its existing factories before investing in new manufacturing lines.

Currently, Tesla operates factories in Texas and Fremont in the US, Berlin in Germany, and Shanghai in China. By the end of 2023, Tesla was manufacturing 1.8 million vehicles annually, but its global capacity stands at 3 million vehicles per year.

Musk indicated during Tuesday’s earnings call that the company anticipates a 50% increase in production over 2023. This suggests that by the end of 2024, most of its capacity will be utilized, with some overflow extending into 2025.

This timeline aligns with the electric vehicle policy of the Indian government, which requires setting up a manufacturing plant within three years, extending up to 2027. It also corresponds with Tesla’s plan to launch new models starting in mid-2025, as announced during the earnings call.

Musk emphasized that the new vehicles, including the more affordable models, will be produced on the same manufacturing lines as Tesla’s current vehicle lineup. While this approach may yield less cost reduction than previously anticipated, it will enable Tesla to maximize its current capacity of 3 million vehicles before considering new manufacturing lines.

Furthermore, Musk provided updates that the future vehicle lineup will commence production in the second half of 2025, dispelling speculation that plans for an affordable car had been abandoned.

Establishing manufacturing plants in India and Mexico would not only expand Tesla’s global production footprint but also align with the growing demand for electric vehicles in these regions. India, in particular, has been pushing for electric vehicle adoption to combat pollution and reduce reliance on fossil fuels.

Tesla’s move into these markets could also stimulate local economies by creating jobs and driving technological innovation in the electric vehicle sector. Musk has previously expressed his interest in the Indian market, citing its potential for renewable energy and electric vehicle adoption.

In Mexico, Tesla could capitalize on its proximity to the North American market and benefit from the country’s skilled labor force and established automotive industry.

However, setting up manufacturing plants in new locations comes with its challenges, including navigating regulatory frameworks, establishing supply chains, and addressing cultural and logistical considerations.

Despite these challenges, Tesla’s expansion into India and Mexico could mark a significant step towards achieving its goal of accelerating the world’s transition to sustainable energy. With the increasing focus on environmental sustainability and the growing demand for electric vehicles globally, Tesla’s presence in these markets could reshape the automotive industry landscape

Jhumpa Lahiri

Jhumpa Lahiri

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