Tesla is considering opening a Gigafactory in Canada
Tesla
Tesla's love for Canada is more evident than ever. A recent email to owners showcases the company's commitment to sustainability and its positive impact on Canada's economy and the environment. The email comes at the same time as Canada committed millions to more charging stations and rolled out its first electric vehicle, a Tesla Model Y, to the country's police force.
Remember, Canada is on the shortlist for a new Giga factory, and these are positive signs that North America may be getting another Tesla-producing super plant. Despite Elon Musk being half Canadian and previously suggesting a Canadian location, he will go to the country, province/state, and city that offers the best strategic location, the most tax incentives, and a skilled workforce.
While recent developments have pointed at a new factory in Mexico, Tesla has previously stated they plan to have 10-12 really big factories that will allow them to produce up to 20 million vehicles annually.
Overview of Tesla's recent email to Canadian owners
Interestingly, the wording in the Tesla email says, "a recent economic impact assessment conducted by Enviro Economics quantified Tesla's impact on the Canadian economy. However, EnviroEconomics states that Tesla asked the company to "assess the economic impact of their Canadian operations and spending, as well as the emission reductions and operational fuel savings associated with Tesla vehicles in Canada."
Why would Tesla want that information unless the company is deep in conversations with Canadian officials? This new information may be the next phase to win over public support for a Tesla Gigafactory development.
Analysis of Tesla's Impact on the Canadian Economy
The numbers make a compelling case for Canada to do whatever it can to encourage a Gigafactory in the Great White North. Tesla spending in Canada has grown by 25% year-over-year between 2018 and 2021. The expenditure was widespread, with 51 economic sectors benefiting from Tesla's investment in automotive parts, charging stations, manufacturing, and retail operations.
Tesla's total contribution to Canadian GDP in 2021 was $762 million, and the company contributed to 6,645 full-time jobs in the country, including 3,100 direct jobs due to its operations and spending. The direct employment impact was equivalent to 3% of all jobs in the auto parts manufacturing sector.
Benefits of Tesla's vehicles in Canada
Canada recently introduced new targets for manufacturers' and importers' vehicles. The regulations state that 20 percent of new cars sold in Canada will be zero emission by 2026, at least 60 percent by 2030, and 100 percent by 2035. There are more than 145,000 Teslas in Canada, including a new Model Y, as part of the Royal Canadian Mounted Police force. It's the first electric vehicle in the fleet and part of the Canadian Net-Zero Emissions Accountability Act. Canada also announced a $15 million investment in 2,350 EV chargers.
According to the study, the benefits of Tesla's vehicles in Canada extend beyond the economy. Between 2018 and 2021, Tesla's vehicles helped avoid 583,000 tonnes of CO2e emissions. Additionally, Tesla owners in Canada saved an estimated $113 million in 2021 in transportation fuel, equivalent to $1,259 in savings per vehicle.
Canada's Commitment to Sustainability and the Future of Tesla in the Country
Tesla's recent email highlighting the company's impact on the country could signify deeper discussions with Canadian officials. The numbers make a strong case for Canada to encourage the establishment of a Tesla Gigafactory in the country. Tesla's spending and contributions to the Canadian economy have grown significantly over the past few years, and its vehicles have helped reduce carbon emissions and save millions in transportation fuel.
The recent announcement of Canada's new zero-emission vehicle targets, investment in EV chargers, and the addition of a Tesla Model Y to the police force all point to the country's commitment to sustainability. Tesla sees an exciting future ahead in Canada and is poised to continue advancing its mission of transitioning the world to sustainable energy.
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There has been extensive reporting on what the long-anticipated affordable EV option would become, and we’ve seen numerous news stories mentioning that it was delayed or even arriving on time. The executive team revealed the near-term and long-term plans for Tesla’s upcoming vehicles, and there’s definitely good news to share here.
Updated Timeline
The most important piece of news is that despite all the talk of delays from supposed inside sources, Tesla has confirmed that the plan for its more affordable model remains on schedule for production to begin in the first half of 2025. Tesla’s executive team narrowed that timeline down further - and said that they expect production to kick off as soon as June and that the new model will be in the market shortly thereafter.
While the production timeline itself is on track, Tesla did note that the subsequent ramping process will likely be slower than initially hoped, citing global tariff and financial impacts as challenges to overcome to prepare its production lines.
Hybrid Production Approach
Tesla has once again confirmed that this will not be their next-generation vehicle, built using new production methods. Instead, they outlined a relatively more pragmatic approach for this new model.
Tesla will utilize aspects of both the next-generation platform as well as some parts of its current platforms (namely the Model 3 and Model Y). This means that Tesla will produce this new vehicle on the same manufacturing lines as the Model 3 and Model Y.
This strategy allows Tesla to bring the vehicle to the market more quickly, while also managing capital expenditures more efficiently by using existing infrastructure. However, Tesla’s executive team also noted that this approach, while faster, will result in fewer cost reductions than what might have been achieved with an entirely new platform and dedicated manufacturing process.
Vehicle Design
Using these existing production lines means that Tesla’s new vehicle will likely share some considerable similarities with either the existing Model 3 or Model Y. Rather than being a radically different and smaller vehicle, this new model will resemble the overall form factor and shape of Tesla’s current core offerings, while being optimized for a lower cost.
This doesn’t mean that Tesla is forgetting the overall goal here. Their ultimate goal is to reduce the initial cost of ownership and lower monthly payments for customers while maintaining a standard of excellence and safety.
Not Unboxed
Both at this Earnings Call and previous ones, Tesla has indicated that this new vehicle will not be using the innovative unboxed assembly method, at least for the time being. That relatively unique method will be developed and implemented specifically for the purpose-built Cybercab and for future vehicles on the next-generation platform.
We’re just a few days away from May, so it won’t be long before we see more about this upcoming vehicle. Stay tuned.
In a follow-up move to the current US administration’s goals to introduce a federal framework for autonomous vehicles, the US Department of Transportation (USDOT) is loosening autonomy restrictions following an announcement from Secretary Sean Duffy on X. This new initiative helps streamline complex regulatory processes and foster home-grown innovation.
From the Wright Brothers to the first astronauts on the moon, our nation has always been at the forefront of transportation technology.
That’s why today we're unveiling a new Automated Vehicle Framework from @USDOT’s Innovation Agenda ⬇️ ⬇️ pic.twitter.com/W3kbMUwQSn
As part of the broader upcoming USDOT Innovation Agenda, the newly unveiled AV Framework is designed to promote American innovation and strengthen domestic engineering while maintaining existing safety standards. The framework centers around three key principles:
Prioritize Safety
Unleash Innovation
Enable Commercial Deployment
To kickstart this AV framework, USDOT announced two initial steps focused on streamlining processes and expanding opportunities.
Crash Reporting Requirements
Under the first principle to Prioritize Safety, the National Highway Traffic and Safety Administration (NHTSA) will maintain its Standing General Order requiring crash reporting on Advanced and Automated Driver Assistance Systems (ADAS and ADS).
However, the reporting process will be streamlined following feedback from AV innovators, likely including Tesla. The goal here is to focus on collecting critical safety information while removing unnecessary or duplicative items from the reporting process, thereby reducing the burden without compromising safety.
Cutting Red Tape
Directly tied to the second principle of Unleash Innovation, the framework also seeks to slash red tape. The first step here is the expansion of the Automated Vehicle Exemption Program, or AVEP. This program allows manufacturers to petition for temporary exemptions from certain federal motor vehicle safety standards (FMVSS) for testing or deployment purposes.
Previously, the standard excluded domestically produced vehicles. Now, domestically produced AVs will not need to meet FMVSS, which will broaden the scope for manufacturers to test more innovative and unique designs and technologies.
Single National Standard for AVs
Finally, tied to the third principle of Enable Commerical Development, USDOT intends to move the United States closer to a single national standard for autonomous vehicles. This aims to prevent a confusing and inefficient patchwork of state-level or city-level laws and regulations, which can create hurdles for companies attempting to innovate, deploy, and scale their technology.
A unified standard across the United States also means that Canada and Mexico will likely be able to follow, as they share homologization standards across North America, including for vehicle crash safety and some autonomy regulations.
What This Means for Tesla
These framework changes will likely have a substantial impact on Tesla. The move towards a national standard is potentially the most impactful change, as Tesla identified regulatory hurdles as one of the most significant challenges it will face with the deployment of both Unsupervised FSD and its Robotaxi network.
The reduction of FMVSS requirements and streamlined reporting will likely play a role in the future as well. The FMVSS requirements are probably already being worked on, if not already met, by the Cybercab and other vehicles in Tesla’s lineup.
Meanwhile, the streamlined reporting will be helpful once Tesla officially launches its Robotaxi network in June.
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