Tesla’s plans to reposition itself on the market with its new Model 2 were widely publicized. However, the company had to reverse this decision and stopped investments in a modular manufacturing plant in India.
Elon Musk’s vision for Tesla has changed as the EV giant shifts their focus from Model 2 to new. This is made just at the moment when Tesla adopts a new strategy of designing “new models” by early 2025 and using the existing manufacturing lines and platforms.
What is Tesla’s Model 2?
With the Model 2, Tesla aimed to penetrate the electric vehicle market while raising its production by 50% from 2023 to close to 3 million. The EV giant said in a statement: “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.”
Elon Musk announced the production of the company’s first low-cost vehicles to be rolled off the belt, speaking at an investor event held recently, just before the scheduled date for the Model 2’s debut.
Tesla’s engineering chief, Lars Moravy, indicated that their new step is to use just the production lines they have now and utilize those already available platforms. This is different from spending resources for the manufacturing processes, which promise a “revolutionary” mechanism, and more so as it cuts costs too.
Morvay said, “That engineering work, we’re not trying to just throw it away,” and added, “We’re going to take it and utilize it.”
“I think we’ve said all we will on that front,” Musk argued while addressing whether the new model would be a rehash version of Model 2 or not.
India factory plans cast into doubt
The decision to forego the Model 2 also impacted Tesla’s plans in India, as Musk canceled a meeting with Indian Prime Minister Narendra Modi, where he was expected to announce major investments in an auto factory for producing the Model 2. Musk cited “very heavy Tesla obligations” as the reason for the cancellation and expressed to visit later this year.
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Musk previously expressed Tesla’s commitment to building a factory in Mexico. But now, with the new model, the company did not provide clarity on its plans for manufacturing facilities in Mexico and India.
Smaller peer, Rivian, known for its R1S SUVs and R1T pickup trucks, announced plans to produce its smaller, less expensive electric R2 SUVs at its existing US factory.
