√‘Much more affordable’ Tesla model one step closer

Tesla CEO Elon Musk has once again suggested the electric car maker is planning to introduce a new model with a price tag half that of the Model 3.

Official Tesla sketch of a smaller car, released in China – though it’s unclear if this previews the production model.

A more affordable Tesla model is one step closer to reality, after company CEO Elon Musk confirmed the carmaker was continuing to consider a cheaper electric car to appeal to a wider customer base.

Speaking at a business forum during the G20 Summit in Bali, Indonesia, Tesla CEO Elon Musk said a cheaper electric car would “make a lot of sense”.

According to Autoblog, Musk was asked about the prospect of Tesla introducing models for sale in developing countries such as India and Indonesia.

“I can’t speak too much about the future of Tesla product development except that we do think that making a much more affordable vehicle would make a lot of sense and we should do something,” he said.

It’s not the first time Musk has hinted at the possibility of a new entry-level Tesla. In 2020, he said a smaller model with a targeted price of $US25,000 is in the company’s plans.

He then backtracked on that promise in January 2022, saying the company had “too much on its plate” to work on the new small car, before re-committing as recently as October 2022.

“We don’t want to talk exact [launch] dates, but this [new model] is the primary focus of our new vehicle development team,” Musk told investors last month.

“At this point, we’ve done the engineering for Cybertruck and for Semi, so obviously guess what we’re working on, the next-generation vehicle, which will be probably about half the cost of [the Model] 3/Y platform. It will be smaller, to be fair.

“But it will, I think … certainly exceed the production of all our other vehicles combined.”

Currently, Tesla’s most affordable model is the Model 3 sedan, which is now priced from $65,500 before on-road costs in Australia after a 9.3 per cent price rise in June 2022.

However, relative newcomers such as the BYD Atto 3 and MG ZS EV have been able to undercut this pricing with smaller vehicles, both of which start at $44,990 drive-away.

Prices of Tesla’s electric cars – in line with other manufacturers – fluctuate based on the cost of the raw materials and facilities used to make them.

In October 2022, it reduced pricing for Model 3 and Model Y cars sold in China by 9 per cent, citing a reduction in costs courtesy of increased capacity at its Shanghai Gigafactory, Reuters reported.

“Tesla adjusts its prices based on raw materials costs, and it raised prices globally multiple times this year in response to those higher costs,” Seth Goldstein, a strategist at US financial firm Morningstar, said in an analyst’s note published by Capital.

“As some raw materials prices have begun to decline, it makes sense that Tesla would reduce its prices accordingly.”

However, when speaking via video link at the business conference in Bali, Musk seemed to suggest he had more pressing issues than developing a more affordable electric car.

“My workload has recently increased quite a lot,” he said told attendees, likely referring to his recent acquisition of social media platform Twitter.

“I mean, oh, man. I have too much work on my plate, that is for sure.”

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