Source : INDIA TODAY NEWS
Tesla’s plans for investment in India to build its factory might get delayed as the US-based EV manufacturer announced its plans to focus on utilising its current factories to produce new, more affordable vehicles by late this year, reported news agency Reuters.
The leading electric vehicle (EV) manufacturer aims to increase production by 50% from 2023 to nearly 3 million vehicles without investing in new manufacturing lines immediately.
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This move, according to Tesla, may result in achieving less cost reduction than previously anticipated but allows the company to grow its vehicle volumes in a more cost-efficient manner during uncertain times.
“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,” said Tesla as quoted in the report.
Investors welcomed this decision, helping Tesla shares up by 12% in after-hours trading despite the company’s quarterly results falling short of financial targets.
Tesla also reduced prices on its cars globally in a bid to increase demand. The EV manufacturer saw a decline in its quarterly profits for the first time since 2020, as per media reports on Tuesday.
Elliot Johnson, chief investment officer at Evolve ETFs, which manages assets worth nearly $6 billion, including investments in Tesla and other EV makers, expressed positivity about the decision.
He highlighted the caution in not rushing into expansion plans amid market challenges and the introduction of a cheaper vehicle within the existing product line.
“I think it’s a positive that he’s not just barrelling ahead with an expansion plan, ignoring the challenges in the market and the fact that he’s doing a cheaper vehicle from the existing product line,” said Johnson.
Earlier reports by Reuters suggested that Tesla had abandoned plans to launch its affordable Model 2 vehicle, which was expected to cost $25,000 and drive Tesla’s expansion into the mass-market segment.
While Musk had previously aimed to introduce the cheaper model in the second half of 2025, Lars Moravy, head of Tesla’s engineering, cited risks associated with new manufacturing processes and production lines. As a result, Tesla opted for a major strategic shift to use existing facilities for the production of low-cost vehicles.
Musk’s scheduled meeting with India Prime Minister Narendra Modi to announce major investments in an auto factory was cancelled last minute, citing “very heavy Tesla obligations.” Additionally, plans for a factory in Mexico remain uncertain, with Musk stating last year that the timing of the investment would depend on economic conditions and interest rates.
Tesla’s silence on its plans for Mexico and India following these developments raises questions about its future investments in these regions.
SOURCE :- TIMES OF INDIA
