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Tesla Eying Asian Production On Back Of Strong Expected Demand For Gen 3 Sedan

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2013 Tesla Model S

2013 Tesla Model S

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Tesla Motors has made no secret of its plans to move into the Asian market, and the company now says manufacturing plants in both Europe and Asia are on the cards. It's part of a large expansion planned for the electric car startup over the next few years, including new model launches, new factories and expectations of continually increasing demand.

According to Bloomberg, CEO Elon Musk says the arrival of a new, smaller model--potentially called the Model E, as a trademark filed last week suggested--will require the building of new plants. Tesla Motors [NSDQ:TSLA] expects demand for the Model S sedan alone to hit 21,000 units this year, and that number could double in 2014.

The new plants are best located close to its customers. The current Fremont plant is ideally located for U.S. sales, but less so for European and Asian markets. Tesla already assembles some Model S components in its recently-opened facility in Tilberg, Netherlands, from where it's conducting its European operations.

“We’ll try to locate those close to where people are, close to where the customers are, to minimize the logistics costs of getting the car to them,” Musk told Bloomberg.

Tesla's next vehicle, the Model X electric crossover, will be built in Fremont alongside the Model S. Production is expected to start late next year. There's no solid timeline for the "gen 3 sedan" yet, but at the recent shareholder meeting in Mountain View, California, Musk revealed the model should appear sometime in late 2016. That gives the company several years to set up facilities abroad, by which time the Model S and Model X should be clocking up comfortable sales numbers.

Musk hasn't yet confirmed whether Tesla will open another plant in the U.S., also rumored.

"That’s where it gets really tricky," said Musk. "What I can say is we do want to ultimately bring this plant [the Model S' plant in California] to its original production capacity of half a million vehicles a year."

Whatever the plans, the next few years will be busy ones for Tesla.

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