Tesla $25k Model has had some increasing quantity of chatter lately. According to official reports, it’s set for presentation later this year in China. Possible production in 2022.
What Do We Know So Far
In the past few years, this has been referred to as Model 2. But Tesla never gave it an official name.
Its first public reference, perhaps, dates back to a 2018 Marques Brownlee interview of Elon, at Fremont’s Factory.
Then, at Giga Shanghai’s first Model 3 delivery event, Elon graced us with Walk Like an Egyptian and stated the following:
We intend to continue making a significant investment and increasing the investment in China, making the Model 3 and the Model Y and future models also in China... Something that would be super cool...so we’re going to do it...is to try to create a China to actually design an original car in China for worldwide consumption. I think this will be very exciting.
More recently, a covered-up tesla model was teased at Tesla Battery day, on Sep 22, 2020.
Finally, Tesla VP of Greater China Tom Zhu mentioned the development of a smaller hatchback in the works to start production later this year.
What’s The Big Deal About A Tesla $25k Model
Tesla’s mission has always been to accelerate the transition to renewable energies. Many environmentally aware people still buy internal combustion engine cars (ICE) because of the sticker price. Unfortunately, as the CEO has put it, “Tesla stuff is not cheap”. So, as production capacity increases, it’s only logical to have an option that is affordable enough for someone who needs a vehicle for the everyday commute but can do away with some range and cargo space.
Besides, even a car like Model 3 can be considered too big for some markets like Europe and China. So, it makes a lot of sense to have a city-friendly option.
On the other hand, this segment can also be a big booster for Tesla´s strategy. Elon said that this affordable model would have all the full self-driving hardware. As the company races to get to full unsupervised autonomy, it could potentially become Tesla’s biggest source of road data.
Moreover, each of these smaller cars could be added to Tesla’s upcoming autonomous ride-hailing network. Imagine, even if they were to be sold at a loss, how much revenue could that bring to Tesla.
Check out this Hypechars Tesla delivery numbers by model. Models 3 and Y aren’t even half of S or X’s price but production became more than double in one year. Now, imagine what would happen as Tesla moves to a lower price segment.
Production Hell V2.0
Of course, something like this doesn’t happen by magic.
The last time that Tesla tried to transition to a higher volume, lower price car, it nearly killed the company. Resources were draining while technical challenges were pilling up. As Elon puts it, it’s easy to make a one-of-a-kind model. It’s really hard to consistently make the same model on a volume production level.
Plus, a higher production model means higher demand for batteries. That has been Tesla’s bottleneck for some time. Keep in mind that the semi-truck, unveiled in late 2017, isn’t even in production in good part for the lack of battery production capacity. Hopefully, this new 4680 cell will be the breakthrough needed to accommodate the higher internal demand.
We are reaching a tipping point for EV adoption, as battery packs are getting cheaper. When EV’s reach price parity with their ICE equivalents, there will be very little keeping people from buying them.
But demand must be met by production capacity. And, right now, there haven’t been many car manufacturers making a serious effort to make EVs in high volume.
Tesla has been showing a high devotion to bringing electrification to a broad spectrum of the automobile market. We are yet to see if logistics and production capacity will be up to the challenge.
I cant wait to see that Tesla $25k Model unveil, later this year. What about you?
Until then, keep in touch. Cheers!
Tesmanian just got a report that LG Chem is building a production line for Tesla’s new 4680 cells. This should be a good source of cells for cars produced at Giga Shanghai.