Some rumors are coming out this week about Tesla’s upcoming $25,000 electric car, but I think it’s better to temper expectations about the timing because of two words: battery cells.
At Tesla Battery Day last year, CEO Elon Musk announced that Tesla will be making a $25,000 electric car.
The CEO commented in the announcement:
Tesla will make a compelling $25,000 electric vehicle that is also fully autonomous.
He made it clear that this new price point is achieved through Tesla’s new battery cell and battery manufacturing effort, which could reduce battery costs by over 50%.
The $25,000 Tesla electric car has been likened to a new electric hatchback that Tesla has been planning to produce at Gigafactory Shanghai in China and export globally.
Last year, Tesla announced plans to establish a new R&D center in China to build “a Chinese-style” electric car.
Tesla started taking design submissions for its Chinese-made small electric car last summer and started hiring for the program shortly afterward.
At the time, the automaker also released this early design drawing of a small electric hatchback. It led many to think that it was the design direction and form factor that Tesla is going for in the upcoming electric vehicle:
The timing for the new vehicle has been unclear, but this week, the media have been reporting on a rumor coming out of China:
A popular Chinese auto blogger who often reports on Tesla stated that sources told him that Tesla completed the first prototype of the vehicle, and they are planning to start trial production by the end of the year.
While I think it’s very possible that Tesla already has a prototype of the unnamed $25,000 model, people need to temper their expectations about production starting within the next year, which is the implication if trial production starts this year.
As Musk mentioned, the new model and its price are enabled by the new 4680 battery cell and structural battery pack.
Now, I don’t think Tesla would necessarily produce the cells themselves for this vehicle as they are validating cells from other manufacturers, and 4680 cells from CATL would make sense for this model.
While I think we might get to see a prototype of the new model within the next year, I don’t think it’s realistic to think it will hit production by the end of 2022.
In order to hit that price target, Tesla will need to have access to a very large supply of the 4680, and it will need to have the structural battery pack platform dialed in.
We would need to see Tesla achieving volume production of the new Model Y with structural first, and at this point, this looks unlikely to happen until at some point next year.
I think 2023 is going to be the year of the $25,000 Tesla car. What do you think? Let us know in the comment section below.
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