$25K Tesla ‘Model 2’ Will Cause Pain Says Industry Veteran

The launch of a low-cost Tesla is all but certain. What’s not certain is how rivals will survive the impact.

Reuters recently reported that Tesla plans to build a 25,000-euro (approximately $27,000) car at its factory near Berlin. This follows news earlier in the year that Tesla will implement a manufacturing process (via Electrek) at its Austin factory that will enable it to build cheaper cars.

Not to mention what Tesla could potentially do at factories in China and a future factory in Mexico.

How receptive would buyers be to a $25k or $27k Tesla?

“They’re going to sell them all day long. And woe to those who are trying to compete with them,” Sandy Munro, owner of Munro & Associates, told me in a phone interview. Munro has a storied career in the automotive industry and is well known for doing meticulous teardowns of Tesla vehicles.

“It will be a people’s car that everyone can afford. Like a Volkswagen,” he said, referring to the old Volkswagen Beetle.

Munro’s sentiments were echoed by Ron Baron this past week (via Teslarati). Baron expects the car to debut in about 18 months.

Musk, who showed a silhouette (at top) of the “new product” at the 2023 Annual Shareholder Meeting in May, said at that time that “I just want to emphasize that we are actually building a new product…we are actually designing a new product…we’re not sitting in our hands.”

Ivan Drury, Edmunds’ director of insights, will believe it when he sees it.

“If one materializes…and customers aren’t left feeling like they’ve compromised on all other aspects of rideability–including adequate range–that would be a minor miracle,” Drury told me in an email earlier this year.

“Everyone wants lower transaction prices, but the current offerings throughout the industry have made it clear the masses aren’t willing to compromise on content, interior space and body style,” Drury said.

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