Tesla's Affordable Model to be Manufactured in Multiple Gigafactories due to Europe's Preference for Compact Vehicles

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【Summary】Tesla is considering producing its affordable Model 2 in more Gigafactories, including one in Europe, due to the continent's preference for small cars. The Gigafactory in Berlin is rumored to be one of the locations for Model 2 production. Initially planned for Mexico, the production of the Model 2 will now start in Austin, Texas. Challenges with permits and finding skilled employees contributed to this change.

FutureCar Staff Nov 05, 2023 10:17 PM PT

Tesla's Affordable Model to be Manufactured in Multiple Gigafactories due to Europe's Preference for Compact Vehicles

Tesla has obtained all the necessary permits for its Gigafactory in Mexico, but it has decided to delay production of its rumored US$25,000 Model 2 in favor of the factory in Austin, TX. However, there is speculation that another Model 2 Gigafactory could be established to serve the European market.

Europeans have shown a preference for more compact and fuel-efficient cars due to factors such as a denser public transport network, narrower roads, and higher fuel prices. Recognizing this trend, Tesla is considering where to assemble its first mass-market electric vehicle, tentatively named the Model 2.

During a visit to the Gigafactory in Berlin, Elon Musk hinted that the Model 2 will also be produced there. He praised the efficiency and importance of the Giga Berlin employees and announced that "a 25k € Tesla will be built here." It is unclear whether Musk was referring to the Model 2's price or to Tesla's anticipated next-gen platform, which is expected to cost less than US$25,000 before subsidies. Nevertheless, Tesla aims to bring its assembly closer to the markets with the highest sales potential.

Initially, the Model 2 was planned for mass production at a new Gigafactory in Mexico. Rumors suggested that the factory could produce up to 2 million units per year, with an additional 2 million units planned for production at Giga Shanghai. However, Musk revealed during a Q3 press conference that the first batches of the Model 2 will be assembled at Giga Texas.

Musk explained that Tesla is currently utilizing only a small portion of the available land in Texas and that the company could potentially handle all scaling and research there. However, the main challenge lies in finding enough skilled personnel. The greater Austin area, which has a population of approximately 2 million people, is experiencing a housing crisis as more people move to the area.

The decision to change plans for Giga Mexico reportedly stemmed from challenges related to unions, permits, and the difficulty of relocating skilled Tesla employees to Nuevo León. Musk assured that construction on the Mexican Gigafactory will begin in the near future. However, before commencing mass production of the utilitarian Model 2 in Mexico, Tesla plans to test the demand by producing it at the Gigafactories in Austin and Berlin.

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