Why Tesla needs a Model 2

Why Tesla needs a Model 2

by Gill D on March 03, 2021

With the rise of more EV rivals coming to market, it’s going to be more important than ever for Tesla to get a cheaper mass market vehicle ready to compete with lower end cars such as the Nissan Leaf and Chevrolet Bolt. Although Tesla CEO, Elon Musk has mentioned plans for a $25,000 EV, which has been unofficially dubbed the Model 2, little has been heard about the progress for production.

Having a $25,000 Model 2 to offer could accelerate the EV manufacturers lead against other carmakers who are focusing on producing affordable cars. China in particularly is taking a swift approach in getting EVs on the road and it has a budget electric vehicle (EV) that is outselling Tesla two to one – but it’s only available in China. The Hongguang Mini EV, a joint venture between the Chinese-owned SAIC Motor and US auto giant General Motors (GM), which retails for $4,500 (around £3,200 / AU$5600) and is proving a hit against its more expensive competitors.

Of course, the Hongguang EVs isn’t a match Tesla’s line-up when it comes to the battery, range, or performance. The Mini EV only has a top speed of just 100km/h (62mph) and can squeeze in just four people. But its mini price is seeing consumers embrace the convenience of a cheap, clean, no-frills vehicle. In fact, the Hongguang Mini EV is now believed to be the second-best-selling EV worldwide, behind the Model 3.

Pickup trucks might be a big hit in the US, but they don’t have a big customer base in China or Europe, and with the Roadster coming at a price tag well past $100,000, Tesla could see there’s a limit in volume potential. A Tesla hatchback less than $25,000 available on multiple continents would be a big sales thrust.

China and Europe are the markets to tap as they are eager for widespread EV adoption and the ideal market for smaller vehicles. This could be an opportunity for Tesla to jump in with a mini-sized, cheap EV.

The quickest and easiest way for Tesla to get going could be a hatchback style that uses the Model 3 platform, but with a smaller 244-mile battery. Tesla has sketched out a potential 2023 Tesla Model 2 that it plans to introduce within 2 years. But as much as Tesla has been promoting the Roadster and the Cybertruck, its real volume seller in the first half of this decade could be a smaller sibling of the Model 3 for China and Europe.

While Tesla is solid when it comes to branding and marketing, and here Elon Musk is very important for Tesla’s sales performance because the CEO has become an innovative, eccentric icon. Through Musk’s endorsement, the Tesla brand gets massive support. In addition to the brand itself, superfast charging stations, economies of scale for batteries, and software expertise, Tesla does show it has the competitive advantage

And although Tesla is very successful in some markets and on the stock market, it should not underestimate the power of other emerging manufacturers and their adjustment to other markets. BMW and Audi have been global brands for decades because of their focus on quality, and Audi is also has a solid footing in China.

The strong pressure on CO2 limits set by the EU and the associated penalties are pushing the electric vehicle market. We saw a huge increase in 2020 with EV sales and it’s only going to get stronger. So, in the face of competition from Chinese electric cars and the German automotive industry, it should be the catalyst to urge Tesla to move forward with a Model 2 sooner rather than later.

Best Seller

Tesla Model S/3/X/Y Wheel Rim Protector Set

$115.00

Tesla Model 3/Y USB Hub - 5 Ports and Secret Compartment For Dashcam &...

$44.00

Tesla Model 3/Y Dashboard Cover

$69.00
BACK TO TOP