Elon Musk recently told investors that Tesla’s development team is prioritising a mass-selling, smaller new model expected to slash the price of entry to the brand.
Without disclosing launch dates – Elon being Elon, they’re always taken with a pinch of salt anyway – the company said it was now its engineering focus.
Musk was commenting in a quarterly investor update, answering a question around cost cuts for platform three vehicles – in the context of a claimed 50 per cent cost reduction between the Model S/X platform (platform one), and the later Model 3/Y platform (platform two).
“We don’t want to talk exact dates, but this is… the primary focus of our new vehicle development team, obviously. We’ve done the engineering for Cybertruck and for Semi,” Mr Musk answered.
“The next-generation vehicle will be probably about half the cost of 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.”
Tesla Inc. CFO Zach Kirkhorn chipped in stating “we’re going to take everything we learned from S, X, 3, Y, Cybertruck and Semi into that platform”.
“As you’ve [directed to Elon] said to us many times, we’re on a 2-for-1 target. So we’re trying to get to that 50 per cent [reduction] number again.”
While the cost at Tesla’s end might be reduced by 50 per cent, that doesn’t mean the car itself will retail for 50 per cent less. But you’d be safe to assume the model whenever it arrives would substantially undercut the Model 3, which for context starts at $65,500 before on-road costs in Australia.
This statement seems to differ from Musk’s comments reported earlier in 2022, when he said development of the reported US$25,000 Tesla was not a top priority at that time.
It’s generally being reported that the new cheapest, and highest-volume Tesla will be produced for the most part at Giga Shanghai, where Australia gets its Model 3 and Model Y.
The Chinese plant has Tesla’s highest installed capacity (north of 750,000 units per annum), and China remains the world’s EV hub despite growth in Europe and the US.