A $25,000 Tesla could upstage the Cybertruck and the Roadster in global sales.
- Tesla plans new $25,000 vehicle for 2023, to be produced in China and exported globally.
- Planned Model 2 hatch is likely to use a new platform, rather than borrow Model 3 underpinnings, to hit a number of technical and price targets.
- A small electric hatch could allow Tesla to take on similarly sized competitors in a number of EV-friendly markets.
Ever since Tesla shared a sketch of a small electric hatch last year, rumors have swirled around a sub-Model 3offering that could allow the EV automaker to challenge the likes of the Nissan Leaf and Chevrolet Bolt. Relatively little has been shared since on the progress of the Model 2, as it has unofficially been dubbed, despite Tesla’s habit of dropping hints about upcoming models for years ahead of launch (see: Cybertruck and the new Roadster).
Tesla CEO Elon Musk reconfirmed plans for such a $25,000 vehicle during Battery Day last year, indicating that it would arrive in three years, but has otherwise remained largely silent about the company’s progress on such a model. Given Musk’s Battery Day comments, production would begin the second half of 2023.
“About three years from now, we’re confident we can make a very compelling $25,000 electric vehicle that’s also fully autonomous,” Musk said in 2020, in one of the more concrete statements about the project to date.
A $25,000 Model 2 could well outsell all other forthcoming Tesla mod0els combined due not only to that price tag but also the appetite of its target markets—especially China—leading some industry observers to argue it should be a higher priority for the automaker than the controversially styled Cybertruck or the expensive, rocket-assisted Roadster. The car would be produced in China for the domestic market and also exported globally.
Pickup trucks, electric or not, are not as big a segment in China or Europe as they are in the US, even though China produces a lot of them for export. And the Roadster is expected to cost well above $100,000, limiting its volume potential. A hatchback priced under $25,000 could dwarf even Model 3 sales on multiple continents—though thinner profit margins than the Cybertruck or Roadster work against it.
Another issue is the fact that the rest of Tesla’s lineup is now a bit dated by traditional automaker product cycle timelines. The Model S is a decade old and is only just receiving a facelift and interior update.
“The Model 2 is an interesting scenario for Tesla’s efforts in China,” Robby DeGraff, industry analyst at AutoPacific told Autoweek. “Right now China is a spicy hot pot for electric vehicles and a market where where smaller vehicles, ICE or EV, are more welcomed with eager arms. Look at the Wuling’s Hong Guang Mini EV (a brilliant collaboration between GM and SAIC). It’s not high-tech or lustful by any means but adorable and bonkers cheap, costing between $4,000-$5,000 US. It’s selling like mad, too, almost double that of Tesla’s much bigger Model 3’s 13,843 units in January. This is where Tesla sees a chance to jump in with a micro-sized EV of its own.”
Unclear is if Tesla would use the Model 3 platform as a starting point for such a hatchback, or something smaller and far differentiated.
The quickest and easiest way out could perhaps be a hatchback body style that uses much of the Model 3 tooling and platform, but with a smaller 244-mile battery that the company has largely avoided offering. The Model 2 would also need to include advanced autonomous tech on board, making the $25,000 target tough for a Model 3-based hatch to hit.
Nonetheless, our whimsical rendering at the top envisions it as a Model 3-based hatchback, along with a few traditional cost-cutting measures such as steel wheels and unpainted bumpers. It’s unlikely that Tesla, being sensitive to design (most of the time), would brave unpainted bumpers and steelies.
A hatchback based heavily on Model 3 architecture might have made sense in 2017 when Model 3 production was just starting out, but would be terribly dated by a 2023 production target. Still, a hatchback body is likely given the tastes of the European and Chinese markets.
But just how much versatility buyers will demand from it remains to be determined. Tesla’s official sketch above pictured it as more of a coupe, which certainly looks attractive from a design standpoint, but may not exactly maximize interior space in markets where it’s likely to be the only car in a household. This is also why the Nissan Leaf and Chevy Bolt are shaped as large hatchbacks or small station wagons.
As much as Tesla has been promoting the Cybertruck and the Roadster, its real volume seller in the first half of this decade could be its sub-Model 3 offering for China, whether it gets the Model 2 name or not. It remains to be seen whether Tesla can stick to its schedule to introduce the vehicle, ahead of rivals in China and elsewhere.