For several years, there has been talk of a more affordable Tesla car, which would cost from $25,000 in the US and around 25-30,000 euros in Europe. Such a machine can be built and run, but many obstacles must be overcome. Why will this be a historic moment?

The road should lead to cheaper electricity

Electric cars must become cheaper and cheaper so that more and more people can afford them. The first Tesla models cost more than 100,000 dollars, and 3-4 years ago you could hardly find an electric model of the brand below 30,000 euros.

They wrote about an affordable Tesla car 5-6 years ago. In 2018, Elon Musk said that the $25,000 car could be released in three years (2021), and Musk talked about the car again in 2020. However, in the 2022 filings, it seemed like a $25,000 Tesla would be impossible.

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Tesla’s cheapest cars cost $35,000 in the US and around €43-44,000 in the EU for the Model Y and Model 3 without subsidies. Now Elon Musk has also confirmed that Tesla is working on a more affordable Entry model.

Tesla’s $25,000 car will be an important step toward the “democratization” of electric cars, as Tesla is a premium brand with cars that are more expensive than the market average. If Tesla releases such a model, it means that it has found a way to make the battery cheaper, the company is intensively working on original technical solutions to reduce production costs as much as possible.

The cheapest Tesla model may not have as much range as a $45,000 or $55,000 Tesla, but neither will a real-world range of less than 150 miles, because it’s not practical. The Tesla Model Y, the best-selling car model in Europe last year, has a range of 350 km in the Entry version.

It must be said that for most Romanian buyers, a car for 25,000 euros is not cheap at all, and the appeal is reduced because the car is electric, and therefore you cannot go directly with it on very long trips, such as a holiday in Greece. For roads of hundreds of kilometers, you need to make a plan so that there is a place to charge the battery. More than 3,000 Tesla cars were sold in Romania last year, and there is clearly room for growth if Rabla Plus subsidies are not significantly reduced.

A $25,000 Tesla is a possibility, but there’s no telling when it will be unveiled

In recent days, the American press has written a lot about this “starter electric car costing $ 25,000”, which Tesla may not release before the second half of 2025, although in terms of meeting the launch dates promised by Musk, Tesla is not doing this. well, postponements are always present. Some called the car “Tesla Model 2”.

It would be reasonable to assume that the first models will arrive in Europe no earlier than the second half of 2026.

When a number of important components are expensive and raw materials are becoming more and more expensive, it is difficult to produce an electric car at an affordable price. Tesla also has profit targets, so it can’t mass-produce a low-cost model if production costs exceed estimates.

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A few years ago, the Model 3 was promised a starting price of $35,000 in the US, but the Entry version was around $42,000 at launch.

Such an affordable model could be built in the US and then in Germany, and some sources say the company intends to build a plant in India as well, but that will take years.

Tesla Motors operates in the electricity market, where competition is becoming increasingly serious. The Chinese are launching many models and have big plans, and the biggest European groups are promising more and more models under 25,000 euros, especially since the subsidies offered by European states will decrease in 2024 and almost completely disappear in a few years.

It will be a big deal if Tesla finds a way to produce this model at a low cost in a factory in Germany. There will be lower transport costs to EU countries and this will avoid the tax “penalties” that cars made in China will have with many European countries that have declared war on these cars.

Tesla is no longer alone in the market segment it created

Tesla Motors has admitted that it cannot increase sales by 40-50% compared to last year, but will have to “make do” with growth of 20-25%.

The market capitalization of Tesla Motors is more than 500 billion dollars, which is not small, the maximum will be reached in the fall of 2021: more than 1,100 billion dollars. Tesla played a crucial role in creating the all-electric car market, made many customers want to own electric cars, and encouraged major car groups to invest in electric car development.

Now Tesla, which has fallen in price several times over the past two years, is forced to lower the average price even lower, and for this it has to release a smaller, urban model, without which it would not do in millions of volumes. units per year, which Elon Musk has talked about so often in recent years.

Musk talked about his desire to produce an affordable car in a biography written by Walter Isaacson and released in 2023. This Entry model was described as “combined” with a “robotaxi” model (a model that would transport passengers without a driver). Musk promised that these new cars will have a completely unusual design.

Sources: Reuters, TechCrunch, Autocar UK, AFP, TechCrunch