Tesla Already Working On Affordable EV, Smaller Than Model 3

Chinese EVs are turning the market upside down; their prices, comparatively lower than European and American models, are causing really big disruptions in the car industry. While every single brand is currently trying to make a significant move, now it is apparently Tesla's turn, once again. Some specific statements by Elon Musk have led analysts to talk about an affordable electric car from Tesla; this time more consistently than ever, and in fact, much more affordable than the current models.

Tesla earnings call presentations are often full of surprises: Elon Musk normally likes to fan the flame of expectations (and by the way: Tesla's stock price as well, perhaps) by giving big headlines here and there. On this occasion, Musk has announced that the Tesla engineering team is currently focused on developing a platform for next-generation electric cars that will represent half the cost of the Model 3 and Model Y platform.

During the last 5 years - at least - rumors have been heard about a smaller and more affordable Tesla model: the hypothetical Model 2 or Model C. However, the high demand for its current models (specifically Model 3 and Model Y), inflation and higher production costs, and the need to invest in new factories and vehicles like the Tesla Semi, had done away with the idea of developing and actually launching an affordable electric car.

However, that project is back in the news again, as announced by Elon Musk during the conference that followed the publication of the financial results for the third quarter of 2022. After having completed the development of the Tesla Semi and the Cybertruck, Tesla has basically focused its muscle and engineering capabilities on the development of a new platform for the next generation of electric cars, which will reduce production costs and make electric cars cheaper.

This new platform will serve as the basis for an electric car smaller than the Model 3 and also cheaper; according to Elon Musk, the goal they have set for this platform is to reduce their production costs by 50% as compared to a Model 3 or Model Y. This reduction also includes less need for labor and space within the factory facilities.

Taking into account the objectives set, Tesla's access car should be priced around 30,000 dollars (the basic Model 3 is currently at 55,000 dollars). There is also another fact to take into account that Musk also wanted to highlight: with this new platform they intend to manufacture a greater number of cars than "all other Tesla vehicles together". This would mean manufacturing more than 1,000,000 EV units a year of its most affordable electric car, although at the moment there is no specific date marked on the calendar, at least publicly.

@Tesla is single-handedly dragging the world into the EV future. can’t wait for the next model 50% cheaper than Model Y $TSLA https://t.co/bbiZ6Mdmgp— ~C4Chaos (@c4chaos) October 20, 2022

However, and although Tesla's affordable car seems closer than ever, this kinds of statements must be taken with caution. Tesla, and specifically Elon Musk, has traditionally made overly optimistic announcements about the market price of its future models, from Model S to Model 3, which in the end have always ended up being more expensive than advertised. However, the current state of the art and the development of its engineering, as well as the greater production capacity (Giga-Texas, Giga Berlin and Giga-Shanghai) and the possibility of obtaining significant subsidies for its manufacture, leave the door to Tesla's affordable electric car more open than ever.

All images courtesy of Tesla Inc.

Nico Caballero is the VP of Finance of Cogency Power, specializing in solar energy. He also holds a Diploma in Electric Cars from Delft University of Technology in the Netherlands, and enjoys doing research about Tesla and EV batteries. He can be reached at @NicoTorqueNews on Twitter. Nico covers Tesla and electric vehicle latest happenings at Torque News.