Tesla is set to produce a more affordable electric vehicle (EV) priced at about 25,000 euros (roughly $26,838) at its factory near Berlin, a move in line with the company’s goal to make EVs accessible to a broader consumer base.
Although the precise production start date is yet to be disclosed, Tesla has not officially confirmed these plans. Nevertheless, the news has positively impacted the company’s pre-market stock value, with a 3% increase.
High EV prices, often compounded by elevated interest rates, have been a significant roadblock to adoption in Europe and the United States. Recent consumer surveys highlight the issue, with the average EV price in Europe during the first half of 2023 exceeding 65,000 euros, compared to around 31,000 euros in China.
Tesla’s CEO, Elon Musk, has long sought to create a more affordable EV. In 2022, he acknowledged the technical challenges and postponed the plan. However, by September, reports indicated progress toward an innovative production method that could reduce costs and increase efficiency by casting the EV’s underbody as a single piece.
Broadening its market reach is crucial for Tesla, aiming to achieve a remarkable 20 million vehicle deliveries by 2030, setting it apart from competitors such as Volkswagen, which have prioritized profit margins rather than setting specific delivery targets during their EV transition.
Elon Musk’s recent visit to Tesla’s factory in Gruenheide, Germany, coincided with the announcement of plans to manufacture the 25,000-euro EV at the facility. Currently, the factory produces the popular Model Y, Europe’s best-selling EV. Tesla intends to double the plant’s production capacity to one million vehicles annually, although specific production figures since March are undisclosed.
German authorities have requested additional environmental impact information regarding Tesla’s expansion plans before granting approval. Additionally, Tesla has pledged a 4% pay increase for all employees starting in November, with production workers receiving an additional 2,500 euros per year from February 2024, resulting in an 18% pay raise within 18 months.
This development marks a significant step for Tesla as it strives to expand its market presence by offering a more affordable EV, potentially accelerating the transition to electric vehicles and making them more accessible to a wider range of consumers.