Electric vehicles (EVs) are a vital component in the industry’s drive to reduce carbon emissions and tackle climate change. The shift to EVs is occurring faster than expected, and significant incumbent carmakers have stepped up their ambitions, including moving toward fully electric fleets and leveraging production sites as hubs for affordable models to accelerate mass adoption. This has brought new entrants with lower costs and various options for consumers, but affordability challenges many.
As the shift to EVs continues, Tesla has been focusing on making its cars more accessible to provide a $25,000 model that can redefine mainstream vehicle ownership and propel mass adoption. Initially, the company’s focus on this model was to be based out of its factory in Mexico, but logistical challenges have reportedly prompted it to rethink this plan. Instead, the company has reportedly focused on expanding its plant in Berlin to accommodate this model. This move signals the shift toward Europe as the central hub for all of its European production.
A source with knowledge of the matter told Reuters that Elon Musk has informed employees at its factory near Berlin that the firm will begin building a low-cost EV in 2023. The Gruenheide plant currently makes the Tesla Model Y for the European market. A video posted by Musk to the X social media platform, which he owns, showed him visiting the facility on Friday and congratulating employees. He also said that the entire factory would be covered with art, referencing that a significant portion of the plant had already been decorated by graffiti drawn by local artists commissioned by the company.
This is a long-awaited development for Tesla, hoping to break into the mainstream of the auto industry and compete with a wide range of cheaper, fully electric cars now available in markets worldwide. A weak economy and high interest rates have hurt demand for EVs, prompting some manufacturers to cut prices in recent months to stimulate sales.
The launch of the new car is another step toward producing 20 million Tesla cars by 2030, ten times its current capacity. During the third-quarter earnings call in October, CEO Elon Musk also said that Tesla was working on an innovation that allowed it to cast almost all of an EV’s underbody in one piece, a potential cost savings that could dramatically cut production time and overall vehicle price.
Tesla declined to comment on the report, and its shares were up 3% in pre-market trading in the United States at 0910 GMT. The stock has gained nearly 14% this year, outpacing the S&P 500 index and its EV competitors. Author: Tinsae Aregay
