Tesla is not only lowering the prices of its current models, but also bringing a much more affordable car to market.
Here’s another way in which Tesla is different from other automakers: it regularly reduces the prices of its vehicles. Some interpreted the company’s recent decision to drop the prices of the base Model 3 and Model Y as a warning sign of flagging demand. That doesn’t seem likely, considering that it was only the entry-level models that got a price cut—Tesla kept the prices of the mid-level trims the same, and actually increased the prices of the top-level trims.
Above: An artists' design rendering of a future, lower-priced Tesla hatchback EV (Source: Budget Direct Car Insurance)
After the latest round of adjustments, the cheapest Tesla you can buy is a Standard Range Plus Model 3, for $36,990. That’s significantly lower than the average price for a new car in the US. Auto prices have soared over the last few months, and according to auto industry authority Edmunds (via USA Today), the average price of a new vehicle was $40,573 as of December 2020—an all-time record.
For lower-income buyers, however, the news that they can buy an EV for less than the average new-car price is small consolation—37 big ones is far more than many working folks can afford, and Tesla’s dream of bringing EVs to the masses remains a dream.
However, Tesla appears to have a cheaper vehicle in the pipeline. At the 2020 Battery Day, Elon Musk teased “a $25,000 car that will be basically on par [with], maybe slightly better than, a comparable gasoline car,” to be available in about three years.
Above: A recent interview with Tesla's China President; Press the "cc" button on bottom right for English subtitles (YouTube: T-Study)
In a recent interview, Tesla China President Tom Zhu said that Tesla’s entry-level compact car will be designed at the Tesla R&D center that’s currently under construction in Shanghai. The new $25,000 EV will be built in China and, while it will primarily be aimed at the small-car-friendly Chinese market, it will also be sold globally. Tesla’s compact EV is expected to be a hatchback, and to share the same platform as Model 3.
Lede Image Source: KDesign AG