We saw hints of a new, $25,000 smaller model on numerous of Tesla's presentation slides from Battery Day in September 2020. It was clearly shown, raising expectations. From the credit rating company Moody's, there was a formal response not long ago. They made reference to Tesla's need to revamp its EV lineup in order to become more competitive and qualify for a credit rating upgrade.
Experts disagree that Tesla's goal of selling 20 million cars by 2030 is realistic given that they currently only offer the Model 3 and the Model Y. It is evident that not everyone will be a good fit for these two vehicles, a medium-sized sedan, and an SUV.
Additionally, they are expensive electric vehicles, and many buyers who want a smaller car would go for a different brand and model. They only have two alternatives moving forward if they can't sell 10 million units of each model. Let's look at Tesla’s options.
Budget Tesla EVs
This makes a lot of sense, and we anticipate that Tesla will go down this road. Elon Musk going on for the past few years that Tesla will ultimately provide automobiles in all categories.
In the case of the soon-to-arrive Tesla Cybertruck, this is already the case. This car aims to satisfy the pickup truck market's desire. There is no question that this car is being created even if it isn't yet available, and expectations are rather high. This held true for the $25,000 automobile that was hinted at Battery Day in 2020 as well.
Tesla still has a number of possibilities for new automobiles, even if we exclude the Roadster, which is a very specialized, low-volume product. And one of them may become a reality earlier than you would expect.
Instead of providing ultra-premium vehicles that cost more than a year's income, Tesla is entering the burgeoning low-cost EV market with a vehicle that is expected to cost about $25,000. We’re speculating that this was the model that they have been hinting at for so long.
We still don't know much about this car, especially when it will really arrive. Even though a 2023 launch was promised, it doesn't seem to be happening. However, Tesla and Musk have given us a general notion of what to anticipate if this automobile ever goes on sale.
The Tesla hatchback’s performance is currently unclear to us because Tesla hasn't provided any information on the motor. Although it's uncertain whether the vehicle will be front- or rear-wheel driven, it's expected to have just one electric motor given its pricing and anticipated size. Since Tesla hasn't yet created a front-wheel-drive EV, it would imply that rear-wheel drive is the most sensible possibility.
The Tesla hatchback's lack of design specs or images appears to be on purpose. Given that a hatchback is a highly specific type of car, we should anticipate seeing a Tesla Model Y-inspired vehicle that also resembles a Nissan Leaf or a VW ID.3.
It's also reasonable to anticipate that the majority of the standard Tesla features, such as the company's infotainment system, access to the supercharger network, and more, will be included in the new hatchback. Will it ever come out? We can’t be sure, but if it does, it’ll be huge for Tesla.
Modifying Existing Models
Affordability is one of the primary reasons for introducing certain new models. It doesn't appear that new EVs will be able to compete with Models 3 and Y in the near future because they are still more expensive than their corresponding ICE counterparts. And Tesla wants to compete across the board in the automotive sector, not just in the electric vehicle market.
Lowering pricing is necessary to attract a larger customer base, but it is up to Tesla to decide whether to do it by introducing new, less expensive models or by degrading the current ones. We haven't grasped Tesla's business strategy if we believe that producing a brand-new EV will result in a $25,000 price tag.
Tesla's primary area of strength is manufacturing, and simplicity is what it does best. Instead of starting from scratch to build brand-new manufacturing lines for a new car, it will be easier to lower the current models to make them cheaper.
Making Teslas Affordable
To produce a car that is more economical, multiple variables can be tweaked. Less battery capacity, a single motor rather than two, and subduing the intricacies across the interior, such as heated or motorized seats, can all be included.
Some of these steps have already been done in a few places, such as China with the Standard Range Model 3 and Europe with the new Model Y with a single motor.
However, there are more capabilities that may be turned off using the software while keeping the option to reactivate them later. It is comparable to how the Full Self Driving or Enhanced Autopilot options are now showcased.
All Tesla vehicles are equipped with the necessary hardware to perform FSD, however depending on the software package selected, either at the time of purchase or afterward, the option can be switched on or off.
The ability to offer all of these alternatives in various ways, such as through a subscription that would allow the company to generate recurrent income over time, is a genuine game-changer for the sector.
A motor boost option may also be purchased all at once or through a subscription. Many integrated functions, including those related to infotainment and others, might function in the same way.
This might keep the vehicle's price at a lower, more reasonable range while preserving the owner's ability to upgrade in the future, whether through full payment or through a monthly or annual fee.
Why stop at just one of these options? The future may combine all of these possibilities. We are certain that Tesla will continue to introduce new models in the future, but we don't believe their portfolio will include as many as two or three dozen models, as some of their rivals do.
Instead, they will attempt to reach as many consumers as possible with maybe 8–10 distinct models, including their high-end Model S, Model X, and Roadster.
However, this is not a situation that will emerge immediately. Tesla is not renowned for initiating the production of new vehicles quickly. Instead of rapidly building new facilities and manufacturing lines, they are more likely to be concerned with how to ramp up, or ramp down, the current models.
Fortunately, they don't need it because their supply is still limited. The best course of action for the company is to keep producing the high-margin cars it presently has while gradually planning for the future and creating game-changing vehicles. Tesla is at the center of the EV market, and it still alienates a lot of potential buyers from being a part of their ecosystem.
Musk didn’t set out to make an exclusive luxury car company. The chances of Tesla gradually working out things they can do to reduce their prices are very likely, be it at a level of production or firmware. We might be seeing a lot of Tesla EVs on the road very soon.