Rama Krishna Sangem
After much thought, Elon Musk’s Tesla electric automobile company has decided to set up plants in India and Mexico to produce low cost cars in 2025. Musk was supposed to come to Delhi this week to talk to PM Modi in this regard, but now the visit may happen after Lok Sabha electins.
Tesla’s plan to manufacture its affordable electric car priced at $25,000 in India and Mexico could materialise sometime in 2025 or thereafter, with Elon Musk declaring that these models would be produced at its existing factories to utilise their full capacity before investing in new manufacturing lines.
The company operates factories in Texas and Fremont in the US, Berlin in Germany, and Shanghai in China. By the end of the calendar year 2023, Tesla was manufacturing 1.8 million vehicles annually. However, it has a global capacity of 3 million vehicles per annum.
Musk pointed out in Tuesday’s earnings call that the company expects a 50 per cent increase in production over 2023. This implies that by the end of 2024, most of its capacity will be utilised, with some spillover into 2025.
New EV policy
This timeline aligns well with the government’s new electric vehicle policy, which mandates setting up a manufacturing plant in India within three years, extending up to 2027. It also corresponds with Tesla’s plan to launch new models starting in mid-2025, announced in Tuesday’s earnings call.
During the earnings call, Musk said that “the new vehicles, including the more affordable models, will be able to be produced on the same manufacturing lines as our current vehicle lineup”.
While he acknowledges that this approach might result in achieving less cost reduction than previously expected, it will enable Tesla to fully use its current maximum capacity of 3 million vehicles, facilitating a 50 per cent growth over 2023 production “before investing in new manufacturing lines”.
Musk also provided updates that the future vehicle lineup would commence production in the second half of 2025, dispelling speculation that plans for an affordable car had been abandoned.
So, we can hope to see Tesla cars on Indian roads from 2026 on.
