Tesla Delays India Factory Plans Amid Shift in Low-Cost Car Strategy

Tesla postpones investments in new factories in Mexico and India.

  • Tesla postpones investments in new factories in Mexico and India.
  • Company aims to increase production by 50% without expanding manufacturing lines.
  • Shift in strategy receives positive investor response despite falling short of financial expectations.

Tesla announced a delay in its plans to build new factories in Mexico and India, opting instead to maximize its existing manufacturing capabilities to produce more cost-effective vehicles. The electric vehicle (EV) giant aims to increase production by 50% without investing in additional manufacturing lines, positioning itself to scale up to nearly 3 million vehicles by 2023.

While Tesla’s adjustment in strategy may result in slightly less cost reduction than initially anticipated, it allows the company to incrementally expand its vehicle volumes in a capital-expenditure efficient manner amidst uncertain market conditions. This cautious approach garnered positive investor response, reflected in a 12% surge in Tesla shares during after-hours trading, despite quarterly results falling short of expectations.

Elon Musk’s earlier plans to establish a factory in India faced setbacks as he cited “very heavy Tesla obligations” for cancelling a meeting with Prime Minister Narendra Modi. The company’s Head of Engineering, Lars Moravy, highlighted the risks associated with new manufacturing processes, prompting a strategic pivot towards leveraging existing facilities for the production of low-cost vehicles.