Tesla Plans to Launch a Low-Cost EV in Europe

Tesla, the leading electric vehicle maker, has announced its intention to produce a 25,000 euro ($27,000) electric car at its Berlin Gigafactory, according to Reuters. The company has been talking about building a sub-$30,000 EV for years, but this is the first time it has revealed concrete plans for the European market.
The affordable EV could be a boost for the electric vehicle transition, which has been hampered by a lack of low-cost options. The average price of an electric car was around $50,000 in September, according to Kelley Blue Book, a vehicle valuation company. This makes EVs inaccessible to many consumers, especially in the wake of the COVID-19 pandemic and the economic downturn.
Tesla Plans to Launch a Low-Cost EV in Europe
Tesla Plans to Launch a Low-Cost EV in Europe

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.

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