Key Takeaways
1. Tesla’s less expensive cars are entering pilot production and quality testing, with a planned release between October and December.
2. The upcoming budget-friendly model, possibly named Model Z, is expected to be a smaller version of the Model Y.
3. Tesla may introduce multiple affordable models, including a compact Model Y and a budget version of the Model 3.
4. The company aims for the lowest monthly lease options, with current leases for Model 3 starting at $299 per month.
5. The release of the new models is focused on creating a desirable car at a lower price, potentially after the federal tax credits expire.
The less expensive cars that Tesla has been hinting at for some time are now entering the pilot production and quality testing phase, with a planned release between October and December.
In a call about the company’s quarterly results, the CFO stated, “we began producing the lower-cost model as we scheduled in the first half,” indicating that Tesla is actively working on and testing its most affordable vehicle yet.
Naming the New Model
Originally known as the Model 2 or Model Q, Tesla’s upcoming budget-friendly car might actually be named Model Z. This new model is expected to be a smaller, less expensive version of the well-liked Model Y crossover SUV.
Lars Moravy, the chief engineer, confirmed that these more affordable Tesla models have been in production aimed at quality validation since June, and will be announced in the fourth quarter. This is also when production will increase, as Tesla is currently prioritizing the output of Model Y and Model 3 units that meet the federal tax credit criteria before it ends on September 30, 2025.
More Than One Model?
Interestingly, Lars mentioned “new, more affordable models” as a plural term. The speculation is that Tesla might introduce a compact version of the Model Y with simpler features and a smaller battery, along with a budget option of the Model 3 based on the cloth-seated version they have been selling intermittently, hence the use of plural.
Regarding pricing, Moravy noted in the Q1 earnings call that they aim for the lowest monthly lease option available, as most customers in the U.S. are looking to lease cars. Presently, leases for the Model 3 begin at $299 per month, but this includes the tax credit.
Commitment to Affordability
Tesla’s engineering head expressed that they are postponing the release of the more affordable Tesla models “just to create a car that everyone loves and wants at a lower price.” However, the timing of the release of the Model 2/Q/Z, or whatever it may be called, after the tax credits run out, may not solely be about enhancing the customer experience.
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