Tesla News: Is the dream of setting up a Tesla factory in India broken? Elon Musk reversed course for this reason!

The world’s most famous electric vehicle company, Tesla, has been eyeing India as a potential manufacturing hub. However, recent developments suggest that the dream of setting up a Tesla factory in India might be shattered. After a challenging last quarter, Tesla is now facing the possibility of delaying the opening of its Indian factory. Let’s dive into the details.

Tesla’s India Plan Cancelled?

Elon Musk, the enigmatic owner of Tesla, was all set to make his first visit to India. His agenda included a meeting with Prime Minister Narendra Modi to discuss the company’s plans for an Indian factory. But suddenly, Musk postponed his visit. What does this mean for Tesla’s India ambitions?

The decision to delay Musk’s India trip is being interpreted as a signal that Tesla might be rethinking its plans for new factories in both Mexico and India. The electric vehicle (EV) maker has ambitious goals, aiming to increase production by 50 percent to approximately 3 million vehicles by 2023. However, it seems that the Indian factory dream is currently on hold.

Model 2 Controversy: Fact or Fiction?

In April, news agency Reuters reported that Tesla had scrapped plans to launch its affordable Model 2 vehicle. The Model 2 was expected to be produced in Texas, Mexico, and other countries. However, Tesla’s CEO, Elon Musk, swiftly dismissed the Reuters report as a “lie.” On Tuesday, Tesla unveiled a new model, distinct from the Model 2 mentioned in the earlier report.

Elon Musk had previously announced plans to produce a cheaper new model by the second half of 2025. This model would showcase Tesla’s revolutionary manufacturing technology and drive future development. Despite any setbacks related to the Model 2, Tesla remains committed to delivering innovative vehicles that will shape the next phase of its expansion

A Major Shift in Strategy: Existing Factories Take Center Stage

Lars Morawi, head of Tesla’s engineering department, emphasized the risks associated with new manufacturing processes and production lines. In a major shift, Tesla is now focusing on building affordable vehicles using its existing manufacturing units. This strategic move underscores the importance of maximizing efficiency and leveraging existing resources.

Meanwhile, Elon Musk’s scheduled meeting with Indian Prime Minister Narendra Modi was postponed due to “very heavy Tesla obligations.” Musk expressed his intention to visit India later this year, potentially announcing a major investment in an auto factory aimed at producing smaller, more affordable models.

Chinese Competition and Subsidies: Impact on Tesla

Reports indicate that several electric vehicle manufacturers in China have launched high-quality vehicles at competitive prices. This fierce competition has led to a significant decline in Tesla’s sales in the Chinese market. Additionally, the Chinese government’s generous subsidies for electric vehicle manufacturing have disrupted Tesla’s business.

As a result, Tesla appears to be reconsidering its plans for the Indian factory. The company reiterated that its vehicle production rate for this year could be lower than in 2023. Despite these challenges, Tesla remains optimistic about sales growth.