More affordable crossovers will certainly help boost sales, but are they really the only answer?
- Tesla says its much-anticipated entry-level electric car is still in development and evolving.
- Despite this promise, there’s still no firm release date, and it’s probably still a few years away.
- A small $25,000 crossover hatchback could boost sales, but success depends on market conditions.
The prospect of more affordable Tesla electric cars has been around for longer than many would like to admit, with reports on its development wavering between hopeful and contradictory. The idea of a smaller, mass-produced Tesla is certainly attractive to investors, but is it really the solution the brand needs in today’s unpredictable market?
Is the Tesla Model 2 still in production?
In April, Tesla refuted viral reports that it was canceling its entry-level electric car program, with Elon Musk saying the reports were completely fabricated. Shortly after, design director Franz von Holzhausen teased fans to “stay tuned,” leaving everyone speculating about the mysterious model. This could be a sign that Tesla still has something valuable in the pipeline, even as it shifts most of its focus to its highly touted robotaxi project.
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On top of that, the much-discussed Tesla Model 2 has no official release date, and its design details remain as elusive as a fleeting ghost. Still, our artists have crafted speculative renderings of the five-door body style that interestingly blurs the lines between hatchback and crossover. Despite its compact size, this little Tesla offers decent utility using the smart design inherent in its electric architecture.
What is competition?
Depending on the market, such a product could compete with electric hatchbacks like the Volkswagen ID.3 and MG4, as well as similarly sized crossovers like the Renault Megane E-Tech and the upcoming Nissan Leaf. More importantly, it could establish a new entry point in Tesla’s product lineup, positioning it below the Model 3 sedan and Model Y crossover in terms of pricing.
More affordable electric vehicles starting at about $25,000 could really give Tesla a much-needed sales boost. However, let’s not kid ourselves; as many automakers have realized this year, navigating the EV space isn’t as simple as it sounds. Launching new models requires significant investments in production and research and development, and Tesla must ensure demand justifies those costs.
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Additionally, let’s not forget that smaller segments tend to generate less profit than larger, higher-end segments due to razor-thin margins. Considering the protracted development and testing phase – a lesson learned the hard way with the Cybertruck – it was clear that this project needed careful consideration.
Uncertain market conditions for electric vehicle growth
Despite some positive signs in the U.S., the recent decline in Model 3 and Model Y sales, as well as the sharp decline in overall EV registrations in Europe, are reminders that nothing is guaranteed in this rapidly evolving environment. In order to achieve its ambitious goal of selling 20 million vehicles annually by 2030, Tesla not only needs first-class products with competitive prices, but also creates a favorable environment for the popularity of electric vehicles on a global scale. Unfortunately for Elon Musk, predicting the latter is about as reliable as fortune cookies.
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