Tesla Delays Production of Model 2 in Mexico, Favors Gigafactories in Texas and Berlin


Tesla, the electric vehicle pioneer, has been granted all the necessary permits for its Gigafactory in Mexico, but a recent decision indicates a shift in the production strategy for its much-anticipated Model 2. The affordable Model 2, priced at around $25,000, was initially set to be produced in Mexico; however, it appears Tesla is now prioritizing Gigafactories in Austin, Texas, and Berlin for the initial production phase.

Several factors are at play in this strategic decision, with market preferences being a prominent one. Europe's driving conditions, characterized by more compact urban environments, narrower winding roads, and higher fuel prices, have led to a preference for smaller and more fuel-efficient vehicles. Recognizing this trend, Tesla seems poised to bring production of the Model 2 closer to the markets with significant sales potential.

Tesla CEO Elon Musk recently visited the Gigafactory in Berlin, where he acknowledged that "a 25k € Tesla will be built here," hinting at the production of the Model 2 in Europe.


The original plan had been to establish a brand-new Gigafactory in Mexico, with rumors suggesting a production capacity of 2 million Model 2 units annually when fully operational, in addition to a similar capacity slated for Gigafactory Shanghai.

However, during a Q3 press conference, Elon Musk revealed a change of direction. The first batches of the Model 2 are now expected to be assembled at the Gigafactory in Texas, known as Giga Texas.

Musk cited challenges related to permits and unions as reasons for this change of heart. He also noted the difficulty of relocating skilled Tesla employees to Nuevo León, Mexico, in comparison to Austin, Texas.

Despite the shift in production strategy, Musk assured that Tesla is committed to building the Model 2. Construction of the Gigafactory in Mexico is projected to commence in the near future. Before mass production of the utilitarian Model 2 begins in Mexico, Tesla plans to test the demand with production runs at the Gigafactories in Berlin and Austin.

This decision highlights Tesla's adaptive approach to global markets and the specific needs and preferences of each region. The Model 2's production locations are chosen strategically to cater to diverse market demands, ensuring that the budget-friendly electric vehicle finds its place in both the European and American markets.

Credit: EVMagz

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