Tesla is gearing up to introduce an affordable electric car priced at approximately 25,000 euros ($26,838) at its factory near Berlin, according to an undisclosed source.
This move is a significant step for the electric vehicle manufacturer, which aims to make EVs more accessible to the masses.
The source did not specify the production start date, and Tesla has refrained from making official comments regarding this development.
Despite the lack of official details, Tesla’s shares rose by 3% in pre-market trading in the United States following the news.
High electric vehicle prices, coupled with elevated interest rates, have been identified as barriers to EV adoption in both Europe and the United States.
Consumer surveys have highlighted these issues, showing that the average retail price of an EV in Europe during the first half of 2023 exceeded 65,000 euros, compared to just over 31,000 euros in China.
Although Tesla’s CEO, Elon Musk, had previously expressed intentions to create a more affordable electric car, he admitted in 2022 that the necessary technology had not yet been perfected and shelved the idea.
However, sources indicated in September that Tesla was making progress on a breakthrough innovation that would enable the production of most of the EV’s underbody in a single piece, potentially expediting production and reducing costs.
Tesla’s expansion into the mass market aligns with its ambitious goal of delivering 20 million vehicles by 2030, setting it apart from competitors like Volkswagen, which have focused on preserving profit margins during the transition to electric vehicles, rather than setting specific delivery targets.
Elon Musk recently visited the Gruenheide plant in Germany, where he expressed his gratitude to the staff for their hard work.
During the same meeting, he unveiled plans to manufacture the 25,000-euro vehicle at the facility.
The German plant is currently responsible for producing the Model Y, which has become Europe’s best-selling electric vehicle.
Tesla plans to double the plant’s capacity to manufacture one million vehicles annually, although production figures have not been updated since March when the company announced it was producing 5,000 vehicles per week, equivalent to approximately 250,000 vehicles per year.
Local authorities have requested further information from Tesla about how its expansion plans align with nature conservation laws before making a decision on approval, without specifying a timeline.
In addition to the vehicle announcement, Tesla informed its workers that they would receive a 4% pay increase starting in November, with production workers receiving an additional 2,500 euros annually starting in February 2024, equating to an 18% pay increase within 1.5 years.
German union IG Metall noted in 2022 that Tesla’s wages were roughly 20% lower than those offered by other car manufacturers under collective bargaining agreements.