Tesla’s plans to build an assembly line in India under the government’s new electric vehicles policy, may get delayed as the company has announced that it will focus on utilising its existing factories to produce new, more affordable vehicles by late this year.
The new product range which the company has planned for launch in early 2025 includes the ‘more affordable’ models it has been working on for emerging markets like India. Model 2, that is popularly known to be the ‘$25,000 Tesla’ is one of these models.
In a post earnings conference call on Tuesday, CEO Elon Musk said, “(New models are) not contingent upon any new factory or massive new production line. It will be made on our current production lines much more efficiently”. He added that information on expansion to new geographies will be shared on August 8, 2024 which is also when Tesla will unveil the Robotaxi, a self-driving car.
The announcement comes days after Musk postponed his India visit. Musk’s India visit was scheduled on April 21-22, which got postponed on April 20. It was widely expected that he would announce the company’s plans to build a new assembly line in India in lieu of availing concessional custom duty on the the import of completely built-up units for three years.
Under the EV policy, global automakers will be allowed to import CBUs at a concessional import duty of 15% for vehicles which are priced $35,000 and above for a period of five years. However, they will be required to set up manufacturing facilities in the country within a three-year period.
Such manufacturers will also have to achieve 25% localisation by the third year and 50% by the fifth year.
Tesla’s vice president of vehicle engineering Lars Moravy said that the company is updating its future vehicle line-up to accelerate the launch of its low-cost vehicles in a more capex-efficient way.
The reluctance in going capex-heavy for expanding production to new geographies such as India is the consequence of the global slowdown in electric vehicle demand. Tesla’s March quarter deliveries were 9% lower year-on-year (y-o-y) while its automotive revenue fell 13% y-o-y. Net income plunged 55% y-o-y.
Over the past week Tesla undertook price cuts in China, Europe and the US in between 4.6% to 5.6% amid heightened competition from Chinese automakers and weakening demand.
Tesla has factories in China, Germany and the US.
