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Tesla’s plans to bring a more affordable electric vehicle to market appear to have taken another step.
On Tuesday, the company’s share price soared 12% after an update revealed that the automaker was looking to accelerate production of lower-priced electric vehicles, with production of the first cars set to begin this year.
So, with investors clearly excited, what exactly is Tesla planning and how soon will it hit the market?
What is Tesla planning?
The key change in their approach is to go faster at the start of production.
On Tuesday, the company said it had updated its future vehicle lineup “to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025.” These would include “more affordable” new vehicles, he added.
In a call with investors, Tesla boss Elon Musk clarified that this would likely mean production would begin “in early 2025, if not later this year.”
But while the company was clear about the timeline, it gave very few details about the design and specifications of the new cars.
Tesla had previously talked about building an unnamed vehicle, often called the Model 2, which would be priced at $25,000 (£20,000) or less. However, This month it was reported that it plans to produce the car. had been scrapped.
During the investor call, Musk seemed reticent when asked whether the new vehicles would be completely new or be tweaks to existing models.
How can you do?
To speed up production of new, more affordable cars, it appears Tesla is having to back out, at least partially, from the Model 2 plan.
The vehicle would have required moving away from traditional assembly lines.
Tesla wanted to implement its “boxless” manufacturing process, in which different parts of the car would be assembled in large groups of subassemblies at the same time, and then put together and connected at the end.
It was expected that this would result in a halving of production costs. But billions of pounds of investment would also be needed to prepare factories.
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However, Tuesday’s announcement indicated that the new vehicles would be built on current manufacturing lines.
According to Reuters, Tesla engineering chief Lars Moravy said the company would avoid the risk of investing in a “revolutionary” manufacturing process. Some commentators believe this marks a complete abandonment of the Model 2 plan.
Sam Abuelsamid, an analyst at consultancy Guidehouse Insights, said: “The next-generation vehicle was supposed to use fundamentally different production processes than current models.
“Without any desire to spend billions on new production facilities or retool existing factories, it appears we will see Tesla continue building current products.”
How much will the most affordable car cost?
The cost of the new “more affordable” models is still unclear. The cheapest of the current Model 3 vehicles starts at about $39,000.
Tesla had initially hoped that the new affordable model could compete with its Chinese rivals by making its Model 2 cost $25,000.
However, the company warned that its revised plan “may result in less cost reduction than previously expected.”