In a move signaling Tesla’s renewed commitment to affordable electric vehicles, CEO Elon Musk announced today that production of the highly anticipated Model 2—a budget-friendly EV—will be anchored by a third mega-factory in Texas. Named tentatively Gigafactory Texas‑3, this sprawling facility is projected to escalate Tesla’s manufacturing capabilities and usher in a new era of accessible EVs.

A Bold Texas Expansion

Located adjacent to the existing Giga Texas complex near Austin, the new site will add roughly 5 million square feet of production space, earmarked to support the next-gen “25‑30 k EV” Musk has long promised. Musk emphasizes that Giga Texas‑3 represents more than square footage—it’s a resounding vote of confidence in Texas as Tesla’s manufacturing heartland.

“Texas will remain the epicenter of our affordable EV push,” Musk told investors on the company’s Q2 earnings call. “This new factory embodies our advanced gigacasting, automated robotics, and next-gen battery tech, giving us the volume and cost structure to finally scale a sub‑$30 k Tesla.”

The Long-Awaited Model 2

Dubbed Model 2 by media—internally referred to as the next-generation platform—this compact, affordable EV aims to attract entry-level buyers priced around $25,000–30,000. Originally slated for late 2025, Tesla now anticipates Model 2’s production launch in early 2026 from Giga Texas‑3.

The vehicle promises to retain Tesla’s hallmark attributes—slide-in driver-assist, OTA updates—while employing innovations like a 50,000-ton gigacasting process (dubbed “Unboxed”) and Teslium X aluminum alloy chassis for lighter weight and quality at scale.

Manufacturing Breakthroughs

Tesla aims to slash manufacturing costs by up to 50% through radical factory efficiency, including:

Gigacasting of major body components using record-sized single-piece molds.

48‑V electrical architecture, reducing wiring complexity and enabling steer-by-wire.

Modular Unboxed Process, where subassemblies are built parallel and snapped together—minimizing labor and parts handling.

These production advances, paired with streamlined battery chemistry (less silicon carbide, no rare earths), reflect Tesla’s ambition to drive down costs while boosting margins.

A Triad of EV Manufacturing Hubs

Model 2’s rollout will unfold across multiple sites:

Giga Texas‑3 — first production node with Austin-based engineers and assembly.

Gigafactory Mexico — second phase starting late 2026, scaling production and local sourcing.

Gigafactory Berlin & Fremont — eventual global ramp-up supporting European and North American demand .

Musk has stressed tight oversight of the Texas facility: “we review the line every week”—a sign he’s treating this project with urgency.

Industry Implications

The Model 2 initiative comes as Tesla faces declining EV sales—down ~13% in Q2—and rising competition from Chinese makers like BYD. Analysts believe launching a mass-market model is essential to regain momentum and satisfy investors .

If Tesla can ramp up volume while maintaining quality, the Model 2 could reshape the EV landscape—forcing rivals to chase lower price points and rethink product strategies.

Challenges Ahead

Despite optimism, Tesla faces key challenges:

Timeline risks: Musk has a history of optimistic deadlines; Model 2 production was delayed previously .

Factory scale-up: Tools, staffing, automation all must scale to “production hell” levels .

Infrastructure and supply: Mexico factory must manage supplier ecosystem; battery cell production will need expansion.

Profit margins: Affordable vehicle means tighter unit profitability—but Tesla expects offset via scale and vertical integration.

What Comes Next

Tesla plans a “reveal event” for Model 2 in late 2025, with pilot production soon after. Series manufacturing at Giga Texas‑3 should ramp from mid-2026, ahead of international expansion via Mexico and Berlin.

Investors and industry watchers will be watching closely: success could deliver on the long-promised democratization of EVs. But any delays or quality missteps could prove costly for Tesla’s market confidence.