Tesla's oft-controversial boss, Elon Musk, has confirmed that the electric car maker has plans to drive down-market, and create cheaper, entry-level models. Speaking on a conference call with investors and analysts, Musk said: "It is important to make the car affordable. I think we will not succeed in our mission if we do not make cars affordable. Like, the thing that bugs me the most about where we are right now is that our cars are not affordable enough. We need to fix that."
“I don’t think we can comment on our detailed product road map beyond what’s announced because I think we want to reserve that for product launches,” he said, “but it would be reasonable to assume that we would make a compact vehicle of some kind and probably a higher capacity vehicle of some kind. These are likely things at some point. But I do think there’s a long way to go with 3 and Y and with Cybertruck and Semi. So it’s a long way to go with those. I think we’ll do the obvious things.”
It is possible that Musk is concerned about upcoming rival models from such manufacturers as Volkswagen and Ford. Volkswagen will shortly have its long-awaited ID.3 hatchback on sale. The most-affordable, for now, ID.3 model will be the ID.3 1st, which will cost from €33,635 and has a 420km range from its 58kWh battery pack.
By contrast, the most affordable Tesla right now is the Model 3 Standard Range Plus, which has a 409km one-charge range and a price tag of €48,900. While Musk seems to be speaking of a completely new model, which would logically be around the same size as a VW Golf or Mercedes-Benz A-Class, the simplest and most cost-effective way for Tesla to create a more affordable car would be to just reduce the size of the Model 3's battery.
The battery, in general, represents around 80 per cent of the total manufactured cost of an electric car, so if Tesla were to reduce the Model 3’s basic battery capacity from its current 54kWh to less than 50kWh, potentially lowering the range to around 350km, then that could create a significantly more affordable base model.
Of course, it's never that simple, and Tesla could well be better off engineering a new model from the ground-up, integrating a new, smaller battery design to maximise potential range while still making a more affordable car. Musk seemed to hint at just this, earlier this year, when he launched a competition for budding car designers to create a 'China-style' Tesla for east Asian markets. "I think something that would be super cool would be to – and so we're gonna do it, we're gonna try to do it – would be to create a China design and engineering centre to actually design an original car in China for worldwide consumption," Musk said at the time. "I think this will be very exciting. I think China has some of the best art in the world and I think it's something that would be appreciated on a worldwide basis. I think it should be done, and we're gonna do it."
It could be, though, that Tesla’s cars are already cheap enough, at least in their primary, American market. In the US, the Model 3’s starting point is $37,990 (€32,300) for the Standard Range Plus version. In May of 2019, the average price of a new car purchased in the US climbed to $36,718, according to motoring website Edmunds. That’s up from $35,742 in 2018.
