Tesla Inc. will produce a new model that will cost €25,000 ($26,863) at its factory near Berlin, Reuters reported, as competition intensifies to produce more affordable electric vehicles.
Chief Executive Officer Elon Musk announced the plan to staff last week when he visited the Tesla factory in Gruenheide, Reuters said Monday, citing an unnamed source. Musk didn’t say when production would start, according to the report. Tesla didn’t respond to a request for comment.
The new Tesla would dramatically reduce the cost of its cheapest offering in Europe, where carmakers are racing to bring down costs and make EVs affordable to a broader range of customers. Currently, Tesla’s least expensive car in Germany is the Model 3, starting at €42,990.
Europe’s mass-market carmakers are racing to produce more affordable EVs, as Chinese brands such as BYD, Nio and MG are seeking to gain customers on the continent, where inflation is eating into consumer spending. Stellantis NV’s Citroen brand last month started taking reservations for a new ë-C3 starting at €23,300, challenging Renault’s Dacia Spring, which starts at €20,800 in France.
Read more: VW Shows €25,000 EV to Compete Where Tesla Has Left an Opening
Germany is typically an expensive location for production with high wages and energy costs. On top of that, Tesla has faced difficulties at its Gruenheide factory, from environmental concerns over its water use to strife over its typical opposition to unions. The factory is home to its so-called giga-press technology, which the company has said will enable it to manufacture EVs more cheaply with fewer parts.
Musk has long foreshadowed building a cheaper EV, first mentioning the plan in 2018 and reiterating the push in 2020. Just like the company’s Cybertruck, progress from announcement to production hasn’t been evident.
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