New EV model for Tesla

TESLA expects to start production of its longanticipated, next-generation electric vehicle at its Texas factory in the second half of 2025, Chief Executive Elon Musk said on Wednesday.

But Tesla shares were down 6.5 per cent in premarket trading as Musk noted that ramping up production of the new vehicle would be challenging and Tesla also warned of sharp slowdown in sales growth this year before the new model launch. Musk said it would take “a tremendous amount of new revolutionary manufacturing technology” required - a sign that any boost to Tesla’s declining pace of growth would take time.

His projection followed a Reuters story earlier in the day saying Tesla had told suppliers to prepare for a June 2025 startup of a smaller crossover vehicle, critical for the automaker as it loses share to inexpensive EVs such as those made by China’s BYD.

“I’m often optimistic regarding time. But our current schedule shows that we will start production towards the end of 2025, sometime in the second half,” Musk told analysts on a post-earnings call.

“We’ll be sleeping on the line practically,” he said, referring to Tesla’s factory in Texas, where the new model will be first produced. That will be followed by Mexico and another factory outside North America to be decided later this year, he said.

The EV maker also warned of “notably lower” sales growth this year as it focuses on the new vehicle on the back of shrinking fourth-quarter gross margin.

Tesla said it was in between two growth waves: one driven by the release of Models 3 and Y in 2017 and 2020, respectively, and a second wave that would start with the next-generation vehicle platform.

Wall Street expects Tesla to sell 2.2 million vehicles this year, according to Visible Alpha. That would be up about 21 per cent from 2023 but well below the long-term target of 50 per cent that Musk set about three years ago. Tesla, however, did not reiterate that target on Wednesday.