Rumors have long circulated about what an affordable Tesla could bring to the EV market. Earlier this year, those speculations began to gain footing as Tesla CEO Elon Musk teased two new projects at the luxury electric vehicle giant's annual shareholder meeting in May. One of those includes an alleged $25,000 hatchback model. A single photo and limited information on the newest EV took the internet by storm and threatened to upset the growing electric market — bringing along both pros and cons. With minimal details, here is what to expect from Tesla's maiden money-saver.
Sources include: Tesla, Counterpoint, and Top Gear.
Introducing a New Era Of Affordability
The current most cost-friendly vehicle Tesla has to offer is the Model 3 RWD, coming in at $29,740. The $25,000 Model 2, or whatever potential name Tesla decides to tack onto the electric car, will aim to bring luxury at a discounted price. Tesla hasn't disclosed the specifics yet, or even pinned down a release date. However, the latest electric model is rumored to be available in 2026.
While the public may not know much, there are a few things predictable about the Tesla formula. Tesla's mileage ranges from the Model 3 RWD's 272 miles to the Model S' impressive 405 miles. Range information isn't available yet for the Model 2, but a less expensive model would most likely sacrifice highly-valued features like long-range, top speed capacity, and acceleration rapidity.
Tesla has dabbled in versatility in the past, offering multiple iterations of each standard model. As a result, the company, like any car manufacturer, is tasked with straddling the demand for on-track performance with calls for longer-range capabilities and lower prices. The Model 2 will allow Tesla to test the ceiling of its manufacturing competence as the price teeters down and the standard for specs only rises.
Model 3 (Standard, Long-Range, and Performance versions) | Model Y (Standard, Long-Range, and Performance versions) | Model S (Standard, Long-Range, and AWD Tri-Motor versions) | |
Price | $29,740 - $42,240 | $36,640 - $42,890 | $74,090 - $104,090 |
Range | 272 - 333 miles | 303 - 318 miles | 320 - 405 miles |
Top Speed | 140 - 162 MPH | 135 - 155 MPH | 149 - 200 MPH |
Acceleration (0-60 MPH) | 5.8 - 3.1 sec. | 4.8 - 3.5 sec. | 3.7 - 1.99 sec. |
Competing In Style, Performance, And Range
Tesla reigns supreme in the electric vehicle industry, but who could be the main competitors in this undeveloped consumer base?
A speculative photo of the up-and-coming Tesla circulated online in January and a shadowy mystery vehicle loomed on-screen at the 2023 Tesla shareholders meeting. However, it is difficult to decipher any concrete vehicle architecture from the photos. Followers of the tech brand have caught on that the penny-saver appears to be a hatchback, though. Current popular all-electric crossovers and compact SUVs include the Volkswagen ID.4, Chevrolet Bolt EUV, Hyundai Ioniq 5, Ford Mustang Mach-E, and the Tesla Model Y.
Tesla would break into the market blazing and compete with the likes of the Chevy Bolt, aka "America's most affordable EV." The price range starts at $27,495 among the five electric cars, putting the possible $25,000 starting price of the Tesla Model 2 in a ripe position for demand. The benchmark for the range isn't excessive either among the group, with the lowest range belonging to the most basic model of the Hyundai IONIQ 5, carrying passengers a minimum of just 189 miles. Most other ranges snuggly fit within the mid-to-high 200-mile area.
The Tesla Model 2, then, will have room to comfortably break into the affordable electric space without worry. Tesla's wide breadth of performance options with respect to a vehicle's longevity means the Model 2 shouldn't have an issue exceeding the minimum 189-mile range marker. In fact, the manufacturer seems set on setting records. "Both the design of the product and the manufacturing techniques are head and shoulders above anything else that is present in the industry," Musk teased in regard to upcoming projects.
Is Tesla Bringing An Accessible Future Or Monopolizing The Market?
Tesla accounted for 50-percent of the electric vehicle market in 2022. What should consumers expect as Tesla taps into a lower price point? A range of benefits and consequences. The techy automotive company has seemed to crack the code of producing electric vehicles in a gas-guzzling world. At Tesla's annual shareholder meeting, Musk shared a few data points that assured investors they were getting a bang for their buck. The Model Y, for example, was the best-selling non-pickup vehicle in the United States, the best-selling vehicle in Europe, and the best-selling SUV in China in Q1 of this year. Production costs are still high for electric vehicles, but Tesla is the only electric car company making a profit and the CEO predicted shareholders would do very well long-term as the economy turns around.
Tesla's entry into a less costly niche is likely to only increase its race-to-space dominance in electrifying the automotive world. The RWD Model 3 already proves to be nearly as budget-friendly in the long term, according to Tesla. The $29,740 model — the cheapest of Tesla's fleet — is comparable to a standard Toyota Corolla. The latter costs an average of $0.46 per mile overtime whereas a Model 3 racks up to just three cents more per mile. The study took into account cost per mile after five years or 60,000 miles with variables including insurance, fuel (gasoline or electricity), maintenance, tires, repairs, depreciation, taxes, fees, incentives, up-front costs, and financing.
But Musk acknowledged that value over time isn't the number one priority for buyers — or even a selling point for some. Rather, up-front costs inform the decision to buy an electric vehicle versus a gas-powered car. "It's not a question of value for money," Musk said during the meeting held at the Tesla headquarters in Austin, Texas. "It's, 'Do they actually have enough money? Can they afford it?'" From the Model Y on track to be the highest-selling vehicle globally this year to the possibility of addressing one of the main concerns keeping people from buying electric vehicles, Tesla's initiative to bring luxury electric cars to a wider audience is sure to disturb the industry. In fact, the company already has.
With its share as the largest EV maker across the globe, hitting nearly 1.4 million in sales according to Tesla, the company risks following its footsteps in the tech sector: becoming a monopoly. However, Tesla insisted its vision for a greener and electrified future requires "everyone to make millions of EVs." This "everyone" included BYD, VW Group, Hyundai Motor, R-N-M Alliance, Stellantis, BMW Group, Ford, GM, Toyota Motor Corp., and Jaguar Land Rover. Compared to the group of all-electric vehicles, Tesla's receiving the most cash-flow and seems to be determining where the industry is headed.
Tesla isn't slowing down — in production, pushing the speed limits, or exceeding the expectations of electrification — and its determination to pioneer the steer toward an all-electric global goal would only be amplified by making the sought-after brand more affordable. As more details surface, Tesla's ability to outdo the competition will determine how far the company can reach. The Model 2 seems to be the next step in securing Tesla's hold on the electric market for the foreseeable future.