In what promises to be yet another wake-up call in the electric vehicle (EV) industry, Tesla has announced that its much-anticipated affordable models might hit their manufacturing lines in the next two weeks. The company claimed it is still on schedule to begin production by the end of June by leveraging its manufacturing infrastructure. It is rather unexpected as Tesla recently abandoned the $25,000 EV plan to focus more on Robotaxis, according to Reuters.
The release of a cheaper EV by Tesla has been planned by the company for years now, with the CEO of the company, Elon Musk, talking a lot about a future when truly good transportation will be available to everyone, and it will be sustainable. The new models, which are expected to have a price below the mark of $30,000, might play a major role in expanding the range of Tesla further than the luxury and premium segments, as many Chinese companies have a cheaper lineup, such as BYD Seagull, which comes at around $10,000.
Production Begins at Current Facilities
Tesla said it will roll out production on existing manufacturing lines, probably in its Fremont, California, and Giga Texas plants, which will be announced to investors and the media.
Using its current infrastructure, Tesla will be able to take advantage of efficiencies and economies of scale that have developed over the last ten years. It has a reputation for being vertically integrated, and this move may turn out to be a masterstroke that helps the company scale a new product within the shortest time without putting massive capital expenditures.
This is also a turning point in Tesla, according to the analyst Karina Wu of EV Futures. The company is communicating to those in the investor base and those in the consumer base that it can become more innovative but still maintain a low expense ratio and a high quality.
Targeting the Mass Market
Over the past few years, Model S, Model 3, Model X, and Model Y have been the core models of Tesla that dominated the EV market but were inaccessible to a large number of people because of their price. Many people settle on second-hand or used models, which are cheaper. The new economic models are meant to alter this.
Although Tesla has not released the official specifications or names, an initial report indicates that the vehicles would provide a range of circa 250-300 miles, and that access to the Tesla supercharger network and full self-driving (FSD) feature would be optional. According to industry experts, the design should be minimalistic, compact, and very efficient, which is Tesla-like.
What is more important is that these models will receive the possibility to receive some EV tax credits through the Inflation Reduction Act, making them even cheaper to U.S. customers. But it is speculated on how long the $7,500 tax credit will last under the Trump Administration.
The Competitive Landscape Gets Hotter
What is worth noting is that Tesla started on time. The EV market is also getting very saturated with legacy makers, Ford, GM, Hyundai, and Volkswagen aggressively entering the lower end of the EV market, where they overtake Tesla in Europe. BYD and NIO, Chinese companies, have also taken their international steps, and they offer well-equipped yet cheap electric cars.
Its competitive edge and an affordable product, combined with the strength of its brand, would allow Tesla to establish superiority in the market when the demand for EVs globally is under pressure due to financial insecurity and a raised interest rate.
BMW CEO Oliver Zipse labeled the all-electric approach a dead end, citing that we should not ignore other technologies such as hybrids, hydrogen. It claimed that the globe is not ready to be fully electrified, and establishing flexibility is the most important way to succeed in the long term.
