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In the past, forTeslaFor them, the issue of concern is not the market demand for the product, but the problem of increasing factory production capacity.

"Our production is hell." Musk once described the production efficiency of his own factory in this way.

In order to improve production efficiency, Musk directly took over the factory producing new cars, and even moved back to the factory to sleep, supervising the work day and night so that the production capacity of new cars reached expectations.

Musk, who is deeply persecuted by production capacity, has to speed up factory construction. In August 2022, at the shareholders' meeting, Musk announced that Tesla plans to build 10-12 super factories around the world in the future, and the planned annual production capacity of each factory is expected to be between 1.5 million and 2 million vehicles.

At that time, Tesla had four vehicle factories, located in Shanghai, China, Berlin, Germany, Austin, Texas, and Fremont, California.

However, just two years after the announcement of the plan to build a new factory, foreign media reported that Tesla would cancel plans to build new factories in Southeast Asian countries, suspend the expansion of the Berlin factory, and the decision on whether to build a factory in Mexico would also be postponed.

The quality of future expectations will be the key to whether Tesla can build factories in the future. In 2022, Tesla plans to achieve an annual sales target of 20 million vehicles by 2030. However, in just two years, Tesla's situation has changed dramatically. The decline in sales and the pressure on performance have forced Tesla to switch from offense to defense.

Image source: Tesla

The factory construction plan was completely cancelled

Recently, foreign media reported that Tesla has canceled plans to build a new factory in Thailand, Malaysia or Indonesia and withdrew the team responsible for the project.

The report also said that Tesla will not build factories anywhere else except China, the United States and Germany, which already have Gigafactories.

In response, Malaysia's Minister of Investment, Trade and Industry Tengku Zafrul posted on social media, "Although we have discussed with Musk, Tesla has not committed to opening a factory."

Malaysian Prime Minister Anwar also said that Tesla's postponement of its expansion plan in Southeast Asia has nothing to do with Malaysia's performance or policies, which is a disguised acknowledgement of Tesla's cancellation of its factory construction in Southeast Asia.

In fact, Southeast Asia is deeply loved by new energy vehicle companies at home and abroad, including Tesla, because of its market potential of hundreds of billions of dollars, low manufacturing costs, and policy support for new energy vehicles.

Tesla is very optimistic about the development of Southeast Asia. Rohan Patel, senior director of public policy and business development at Tesla, once said that Southeast Asia will undoubtedly become a major growth point for battery energy storage and electric vehicle applications in the next few years, and will be able to provide a large customer base at a time when demand in the United States slows down.

According to the forecast of the international accounting firm EY, by 2035, the sales of electric vehicles in six Southeast Asian countries (Thailand, Indonesia, Malaysia, the Philippines, Singapore and Vietnam) will reach 8.5 million, and sales will increase from US$2 billion in 2021 to US$100 billion.

Not only Tesla needs the Southeast Asian market, but Southeast Asian countries such as Thailand and Malaysia also need Tesla to promote the development of new energy vehicles in their own countries.

Among them, the Thai government's policy goal is to become the core production base of hybrid and electric vehicles in Southeast Asia by 2025. In 2025, 2030 and 2035, the output of hybrid and electric vehicles will account for 15%, 30% and 100% of the total output respectively.

Gasgoo Automotive Research Institute predicts that Thailand's automobile market sales may reach 910,000 vehicles in 2027, of which new energy vehicle sales will exceed 180,000 vehicles and the new energy penetration rate will reach 20%.

The "Low-Carbon Mobility Blueprint 2021-2030" released by Malaysia mentioned that by 2030, the proportion of electric vehicles, including hybrid vehicles, in total vehicle sales will be increased to 15%.

In view of this, Southeast Asian countries such as Thailand and Malaysia have extended olive branches to Tesla, hoping that Tesla can build factories in their countries. Former Thai Prime Minister Setiawan and Malaysian Prime Minister Anwar have both held talks with Musk.

In order to attract Tesla, Thailand and Malaysia offered it generous conditions. Seta personally received Tesla executives and visited three industrial zones in Thailand. At the same time, the government promised to provide Tesla with 100% green facilities.

The Malaysian government abandoned its long-standing joint venture policy and allowed Tesla to enter the market independently.

However, with Tesla's "broken promise", the efforts made by Southeast Asian countries will be in vain.

Image source: Tesla

Tesla's plan to stop expansion is not limited to Southeast Asia. According to foreign media reports, Tesla will also suspend its Mexican factory. Musk said that Tesla will postpone the decision on whether to build a factory in Mexico until after the US presidential election in November.

The expansion of Tesla's German factory has also encountered twists and turns. Last month, the Brandenburg State Environment Agency of Germany partially approved the expansion plan of Tesla's Berlin factory, which is expected to increase the annual production of the Berlin factory from the current 500,000 vehicles to 1 million vehicles.

However, Andre Thierry, manager of Tesla's Berlin factory, said that before confirming market demand, billions of dollars will not be invested in factory expansion. "If there is no clear signal from the market that expansion is needed, we will not spend billions of dollars to expand the factory."

It is clearly a two-way cooperation, especially with the generous benefits offered by Southeast Asian countries, why would Tesla give up?

Defeated by reality

Thierry pointed out that Tesla must consider an important factor when expanding its Berlin factory: electric vehicle sales.

In fact, this factor applies not only to the consideration of whether to expand the Berlin factory, but also to cooperation with Southeast Asian countries and Mexico.

In the past, Tesla planned to build factories overseas, mainly because its sales continued to grow and it was optimistic about the future.

In 2022, although Tesla's annual cumulative sales were only 1.31 million vehicles, it planned to achieve an annual sales target of 20 million vehicles by 2030. In order to meet this expectation, building factories overseas became a natural thing.

However, plans cannot keep up with changes, and only two years later, Tesla's performance began to have problems.

In 2023, Tesla's annual vehicle deliveries reached 1.8 million, and it successfully completed its annual sales target. However, behind this seemingly positive performance are many hidden concerns and challenges.

According to statistics, Tesla's global sales growth continued to slow down from 2021 to 2023, with year-on-year growth rates of 87%, 40% and 38% respectively.

If the growth rate continues at this rate, the sales target of 20 million vehicles may become empty talk.

Entering 2024, Tesla's sales volume turned from rising to falling. In the first quarter of 2024, Tesla's global cumulative deliveries were 387,000 vehicles, down 8.53% year-on-year and 20.2% month-on-month. This is also the first time in the past four years that Tesla's quarterly deliveries have fallen year-on-year.

Although sales in the second quarter increased month-on-month, they continued to fall year-on-year, down 4.7% to 444,000 vehicles.

Obviously, based on current sales, Tesla's global production of nearly 2 million vehicles is more than enough to meet current sales needs, and there is even a lot of idle production capacity.

In addition, Chinese car companies' aggressive entry into the Southeast Asian market has caused Tesla headaches.

Taking Thailand as an example, China will surpass Japan in 2023 to become the largest foreign investor in Thailand's automotive industry, including SAIC,Great Wall、BYDThe deputy spokesman of the Thai Prime Minister's Office said that the Chinese electric vehicle industry has shown great interest and initiative in investing in Thailand, and China's investment in the Thai automotive industry has exceeded US$1.44 billion.

Thanks to this, Chinese independent brand models occupied eight places in the TOP10 list of best-selling new energy vehicles in Thailand in 2023.

According to the Gasgoo Automotive Research Institute, Chinese brands will rely on their consolidated leading advantages in the field of new energy vehicles to form differentiated competition with traditional automakers such as American, Japanese and German brands in new energy products and new retail channels. It is expected that the market share of Chinese auto brands in Thailand will reach 25% in 2027.

Anwar pointed out that Tesla delayed its expansion plans in Southeast Asia because the company was unable to compete with Chinese electric vehicles, resulting in losses.

Tesla's inventory backlog is serious due to lower-than-expected sales. Foreign media compared satellite images of the Nevada Tesla Gigafactory in Texas in October 2023 and March 2024 and found that the parking lot around the factory has gone from being partially or almost full to being completely full. In addition to the Gigafactory, Tesla also stores unsold vehicles in parking lots elsewhere in the United States.

Not only due to sales volume, the pressure of increasing revenue without increasing profits also forced Tesla to make the decision to stop building the factory.

According to the second quarter financial report, the company's revenue was US$25.5 billion, a slight increase of 2% year-on-year, but its net profit was only US$1.5 billion, a year-on-year decrease of 45%, which did not meet Wall Street expectations.

It is foreseeable that if Tesla continues to build a factory, its profit pressure will increase. Last year, Seta revealed that Tesla would build a factory in Thailand with an investment of no less than US$5 billion.

Overall, whether it is profit pressure or sales pressure, Tesla no longer has the motivation to continue building factories.

Summarize:It is predictable that whether Tesla will continue to expand depends on the subsequent performance. After all, Musk, who attaches great importance to efficiency, will hardly tolerate the factory that has been built with a lot of money becoming idle capacity, and he is also unwilling to repeat the capacity hell of two years ago.

Currently, Tesla is looking for new growth points. At a recent earnings conference, Musk revealed the latest progress including the introduction of FSD into China, self-driving taxis, humanoid robots, 4680 batteries and more affordable models.

Whether the above plan can be carried out as planned and whether the results can be as expected will inevitably be the key to whether Tesla can continue to expand.