Tesla seems to be preparing to introduce a cheaper model than its current offerings. Elon Musk, the CEO of Tesla, reportedly mentioned this in Berlin, Germany.
Tesla has long strived to sell electric vehicles (EVs) at more affordable prices. However, there have been hitches in applying relevant technologies to make EVs cheaper. Now, Tesla’s technical difficulties appear to be gradually being resolved, though the specific production schedule for the more affordable model has not yet been disclosed.
Could Tesla’s cheaper model be priced under $30,000?
On November 6th (local time), Reuters reported Tesla’s new production schedule, citing an anonymous source. Elon Musk visited the Grüneheide factory on the outskirts of Berlin, Germany, on the 3rd and mentioned the production plan for the cheaper model to the employees. The Berlin factory currently produces Model Y, Europe’s most popular electric car.
According to Reuters, the price of the new low-cost electric car, ‘Model 2’, is less than $27,000, which is quite affordable. The specific production schedule is not yet confirmed. The cheapest electric car currently sold by Tesla is the Model 3, which sells for $38,990. The Model 3, launched in 2019, was even more affordable at $35,000, but that’s still much higher than the price set for Model 2, under $30,000.
In April of this year, CNBC, a U.S. economic media outlet, also reported a similar story about Tesla’s low-cost model. According to the report at the time, Tesla’s low-cost electric car is expected to be produced next year at a price between $25,000 and $30,000. Some analysts predicted that the cheaper Tesla model would offer a comfortable ride but might be somewhat flimsy.
How will Tesla lower the price?
Tesla has been planning to lower the price of electric cars for years. In early 2018, Elon Musk mentioned targeting the production of a low-cost model in the range of $25,000.
However, due to technical limitations, Tesla could not significantly lower the selling price. Last year, the company even put off related plans because it failed to master the technology to make it cheaper.
Now, Tesla plans to produce cheaper models by applying Gigacasting technology to the entire underbody of electric cars. So far, the company has actively used Gigacasting technology on the front or rear of vehicles. Now, the method of die-casting the entire underbody of the car in one piece is applied.
Gigacasting pioneered and maintained by Tesla, differs from the typical vehicle production method of welding and connecting dozens of metal panels. Instead, it creates the vehicle’s overall shape with one large metal plate. This method, which can reduce the body’s weight and the number of parts and costs, is being recognized as an innovative electric car production method. Also, the advantage of the lightened weight is that it increases the driving range.
Many manufacturers have wanted to utilize Tesla’s Gigacasting method. For instance, Toyota aimed to improve productivity by 20% compared to other companies by creating the front and rear chassis using the Gigacasting method.
The Background of the Strategy to Launch a Cheap Electric Car
Recently, many companies that used to manufacture pure internal combustion engine vehicles have switched to hybrids and battery electric vehicles (BEVs) that apply both internal combustion engines and electric motors. As a result, competition in the market for eco-friendly cars using electricity has intensified daily, but consumer demand has gradually decreased. Many companies that entered the market have struggled with sales.
The situation of sluggish demand was the same for Tesla. In the intensifying competition, Tesla sought to lower vehicle prices to regain declining demand and establish a unique position in the market.
Thus, many companies began to turn their eyes to the strategy of selling cheap electric cars. In fact, according to the U.S. car evaluation agency Kelly Blue Book, the average selling price of electric cars was set at around $50,000 last September. The high price of electric cars made ordinary consumers hesitate to purchase. A cheaper option was needed to increase the demand for electric cars.
In August, Tesla also announced a plan to sell 20 million electric cars by 2030. IT specialist media TechRadar reported that the launch of a cheaper model would play a critical role in Tesla achieving its goal. Reuters predicted that if Tesla’s goal is achieved, it will account for about 20% of the global car market.
By. Choi Hyunjung
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