- Musk hopes his news can rebuild confidence in Tesla's growth story and bolster its sagging stock price as markets lose faith in Trump's administration. Instead of solving America’s most pressing economic problems, voters have a president escalating trade wars with allies and an entrepreneur whose cost-cutting efforts might be doing more harm than good.
Looking to turn the page on an atrocious start to the new year, Tesla CEO Elon Musk promised President Trump he would double his carmaker’s U.S. production during his second term.
The news comes at a crucial time when markets are losing faith in both men, jointly billed as the solution for all of America’s economic problems. Instead, Trump has been busy escalating trade wars with many of the United States' allies and Musk's cost-cutting efforts might be doing more harm than good. The result has been the worst first 50-day stock market performance for a president since 2009—including a rout in the price of Tesla shares, and growing fears of a U.S. recession.
“As a function of the great policies of President Trump and his administration, and as an act of faith in America,” Musk told reporters on Tuesday, “Tesla is going to double vehicle output in the United States within the next two years.”
Tesla has installed capacity to build more than 1 million vehicles annually in the U.S., although it uses only about three-quarters of that. Initially, Musk had planned to expand further with a plant in Mexico, but Tuesday’s announcement suggests this is now definitively buried. It comes amid rising doubts around Tesla's growth story.
Musk's emphasis on the growing the "real" U.S. economy
Musk has been under heavy pressure ever since he took over as the de facto head of DOGE, a government-efficiency initiative to cut back on waste and reduce the deficit.
His approach, however, has been similar to those at his companies where he is known for mass layoffs or even sacking entire business divisions only to hire them back when the wheels come off.
That may work at companies, since they compete among rivals for a customer’s business. Should they go bankrupt, there are alternatives. A government, however, is often the only provider for certain critical services—like Social Security payments—and when mistakes are made, they can be acutely felt.
But Musk vowed efforts would pay off for the country in the long run.
“What really matters is moving people from jobs that are low productivity in government to high productivity in the private sector, increasing the true output of products and services,” he said. "That’s the real economy, that’s what actually enables Americans to have a higher standard of living.”
Plans for Tesla's Mexico factory never got off the ground—literally
Musk’s announcement, in all likelihood, was already part of his plans following Trump’s election.
During Tesla's investor day two years ago, Musk had promised to build the fifth car factory near Monterrey in the Mexican state of Nuevo León.
The first sign it would not move forward came only seven months later, however. During the Q3 investor call, a despondent Musk said he would take it slowly with an expansion of capacity, as Teslas were still unaffordable for most Americans.
Last summer, after a ground-breaking ceremony kept being postponed, he then backed off almost entirely by citing tariffs in the case of a Trump presidency.
Incoming models give Musk confidence next year will be "epic"
Musk will now most likely just shift his plan for Monterrey to his factory in Austin.
That means building the sleek two-door CyberCab, a model designed without a steering wheel or pedals, in large volumes starting in 2026.
Secondly, Austin could add an entry-level car colloquially called the Model 2, which was promised to sell for $25,000 when first pitched during Battery Day in September 2020.
Together, these two vehicles were initially expected to add another 5 million to global production across all Tesla plants annually
Even adjusting for just a U.S. share of that, there should be enough upside for Musk to hit his growth target of doubling vehicle output in two years’ time.
“I think it will be an epic 2026 and a ridiculous ’27 and ’28,” he told investors during the fourth-quarter earnings call in January. “Ridiculously good.”
