Tesla’s CEO Elon Musk reportedly told staff about the plans during a visit to the factory on Friday. He did not say when production would begin, but Tesla has previously hinted that production of a new low-cost vehicle, known as the Model 2, could start next year. The Model 2 is expected to be a compact hatchback that will compete with other popular models in Europe, such as the Volkswagen ID.3 and the Renault Zoe.
A Long-Awaited Goal for Tesla
Tesla has long aimed to produce a truly affordable electric car, as part of its mission to accelerate the world’s transition to sustainable energy. The company started with premium models, such as the Roadster, the Model S, and the Model X, to generate profits and fund the development of mass-market models. The Model 3 sedan and the Model Y small SUV were the first steps in that direction, but they still cost more than $35,000.
Musk said as early as 2018 that the company was aiming to produce a $25,000 car, but the goal seemed elusive due to various challenges, such as battery costs, production bottlenecks, and regulatory hurdles. The company also faced increasing competition from other automakers, such as Ford, GM, and Volkswagen, who have launched their own EV models in recent years.
A Global Strategy for Tesla
The announcement of the low-cost EV in Europe is part of Tesla’s global strategy to expand its presence and market share in different regions. The company has built Gigafactories in China and Germany, and plans to build more in Texas and India. The company also tailors its products to the local preferences and needs of each market, such as offering longer-range versions in China and smaller models in Europe.
Tesla has also cut the prices of its vehicles multiple times this year in the US, where it still dominates the EV market. However, the company has warned that economic worries are making EV customers more cautious, and that it faces supply chain issues and chip shortages that could affect its production and delivery targets. The company is also facing questions about the cost and availability of its futuristic pickup, the Cybertruck, which is supposed to start deliveries on November 30.
Tesla did not immediately respond to a request for comment from Insider, made outside normal working hours.