Tesla has adjusted its plans related to the next-generation electric vehicles, which are expected to be produced at a rate of millions of units annually.

According to an exclusive excerpt from Walter Isaacson's biography of Elon Musk, published by Axios, Tesla has been weighing options over the past two years.

Tesla's CEO Elon Musk outlined in November 2021 a vision to develop a fully autonomous Robotaxi electric vehicle - smaller, less expensive, and not as fast as the Model 3. However, his focus was to immediately go with the fully autonomous approach, meaning a vehicle with no steering wheel, pedals, or mirrors. Musk also commented on the high volume, saying "Someday we want to be at twenty million a year."

"Let me be clear," he said slowly. "This vehicle must be designed as a clean Robotaxi. We're going to take that risk. It's my fault if it f--ks up. But we are not going to design some sort of amphibian frog that's a halfway car. We are all in on autonomy."

However, Musk's vision appeared too risky for most of the other Tesla execs and engineers, who spent quite some time convincing him to work also on the affordable ($25,000) electric car, based on the same next-generation platform. According to Walter Isaacson, at the end of the summer of 2022, Tesla chief designer Franz von Holzhausen, together with others, tried to persuade Elon Musk to "cover his bet."

Their arguments were that Full Self-Driving (FSD) might not be ready or if it was ready,  there was still a chance that it would not be approved for use internationally by the law. Another thing was that there is a huge market for an affordable car, which also might be crucial to achieve the long-term goal of increasing the production volume by 50 percent per year on average.

Elon Musk opted for "a historically mega-revolutionary product", which would "transform everything" and potentially make "Tesla a ten-trillion company," but maybe it's still too early to exclude a more conventional approach.

Ultimately, Franz von Holzhausen and others convinced Elon Musk to develop both - the Robotaxi and the affordable model - on the next-generation platform, rather than focusing solely on the Robotaxi.

The models of the two new EVs were shown internally to Elon Musk in February 2023. The article notes that "Both had a Cybertruck futuristic feel. Musk loved the designs. "When one of these comes around a corner," he said, "people will think they are seeing something from the future."

Tesla Giga Mexico or Texas?

Another important thing is where the new EVs will be produced. Initially, it was announced that Tesla would build a new gigafactory in Mexico to produce the next-generation EVs.

However, it turned out that the company's top engineers would have to relocate to Mexico to develop the manufacturing lines, which they are unwilling to do.

Walter Isaacson noted that "Tesla engineering will need to be on the line to make it successful, and getting everyone to move to Mexico is never going to happen."

Because of that, in May 2023, Tesla decided to change the initial build location for the next-generation EV from Mexico to Austin. It seems that development and initial production will take place at the Giga Texas factory before the working production lines are copied to other places like Mexico and maybe somewhere else.

It would also explain why the construction of the Giga Mexico did not start yet. The project appears delayed due to the lack of permits, according to some reports, but very likely also because of the changed plans.

Tesla Giga Mexico in brief:

  • announced on March 1, 2023
  • location: in the Santa Catarina municipality near Monterrey (Nuevo Leon)
  • construction was initially expected to start within about three months (Summer 2023)
  • purpose: next-generation EVs
  • info from Mexico's government:
    nearly 4,200 acres
    initially: $5 billion investment and 5,000 people
    ultimately: $10 billion investment and 10,000 people
    production output of 1 million vehicles annually
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