Tesla appears to have teased its upcoming entry-level model, while the leader of Mexico has announced the US electric vehicle brand is building its next plant there.

    The news comes just a day before the Tesla’s Investor Day event scheduled for March 1 at 3pm Central Time, or 8am AEDT on March 2, where the company is set to make a series of announcements.

    A teaser image in a recently published corporate video depicts a number of sketches (one of which has been previously published) that show a vehicle seemingly smaller and sleeker than a Model Y.

    It’s unclear whether this model – currently being referred to as the Model 2 – will be built at the Monterrey, Mexico plant announced by that country’s President, Andres Manuel Lopez Obrador.

    Monterrey doesn’t currently have any car manufacturing plants, although Mercedes-Benz does make buses there. It’s the capital of the northern Mexican state of Nuevo Leon, which borders Texas, where Tesla has another plant.

    President Lopez Obrador says Tesla CEO Elon Musk committed to using recycled water through the manufacturing process – important in an arid state like Nuevo Leon – but didn’t confirm how much the investment would be, or what the plant would produce.

    He also didn’t confirm whether batteries would be produced on-site, but all is expected to be revealed at the Investor Day event.

    Reuters reports word from a Mexican source with knowledge of the matter the initial investment will be worth around $1 billion (A$1.48bn) and further phases could bring total spending to $10 billion (A$14.85bn).

    “He was very responsive, understanding our concerns and accepting our proposals,” President Lopez Obrador told media.

    “I want to thank Mr. Elon Musk for being very respectful, attentive and understanding of the importance of addressing the problem of water scarcity.”

    “Mexico won, Nuevo Leon (NL) won, WE ALL WIN!” Nuevo Leon Governor Samuel García declared on his Twitter account, celebrating the news of a vehicle plant in his state.

    The Mexican plant would bring the number of Tesla factories up to five. The company has plants in Austin, Texas and Fremont, California in the United States, as well as one near Berlin in Germany and another in Shanghai, China.

    Tesla said earlier this year it would announce details on its next-generation platform on March 1, 2023.

    Said “generation 3” platform could underpin a new entry-level model and a robotaxi.

    “[An entry-level vehicle is] the primary focus of our new vehicle development team, obviously,” said CEO Elon Musk in a conference call following the release of Tesla’s Q3 2022 financial results.

    “At this point, we are done with the engineering for Cybertrucks and for Semi. So, it’s obviously what we’re working on, the next-generation vehicle, which will be probably be about half the cost of the 3 and Y platform. It will be smaller, to be clear.”

    Tesla’s cheapest model at present is the Model 3 RWD, which opens at $64,300 before on-road costs. Chinese brands like BYD and MG are making inroads in the local electric vehicle market with models that start well below that.

    Elon Musk spoke of a new entry-level model back in 2020, with a mooted base price of US$25,000 (A$36,209 in today’s money) and “fully autonomous” capabilities.

    But in 2021 the Tesla CEO appeared to pour cold water on plans of an entry-level model, saying during an earnings call, “We are not currently working on a $25,000 car. At some point we will. But we have enough on our plate right now — too much on our plate, frankly.”

    One of those items on Tesla’s plate is the Cybertruck, which has been delayed and now won’t enter volume production until next year.

    Tesla could keep costs down with its new 4680 batteries, first announced in 2020, which are said to be both more energy-dense and affordable to produce.

    The company confirmed in December it had reached a weekly production output of 868,000 cells, which it says is enough to power 1000 vehicles.

    A new entry-level model could help boost Tesla sales in the important Chinese market, where it would likely be produced.

    Tesla announced price cuts there earlier this year, which gave the brand a boost in sales. But it’s facing tougher competition from local brands, chief among them BYD which is rolling out more affordable EVs like the Dolphin and Seagull.

    In addition to a new entry-level model, Tesla is also expected to imminently reveal an updated Model 3 with a simplified interior.

    William Stopford

    William Stopford is an automotive journalist based in Brisbane, Australia. William is a Business/Journalism graduate from the Queensland University of Technology who loves to travel, briefly lived in the US, and has a particular interest in the American car industry.

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