People are pumped about the Tesla Model 2

Imagine if you could actually buy a Tesla on a regular wage? Wouldn’t that be great?

Well, it turns out that big shot, high-flying, “real-life Tony Stark” Elon Musk is answering your prayers with an upcoming vehicle dubbed the Model 2.

Tesla has not yet officially announced the name of the vehicle. However, the company did indicate at its “Battery Day” that it intends to introduce a new, cheaper car based on an entirely different architecture from the Model 3

Musk hinted that Tesla would be producing cars as cheap as $25,000. Traditional analysts assumed that the carmaker was cutting the price of the Model 3, causing the share price to take a tumble. But later, Musk sent out a Tweet confirming that the lower price tag referred to a totally new model, not just a stripped-back Model 3. 

Tesla has come under increasing fire over the last couple of years for not making good on its promise to create a mass-market $35,000 electric vehicle. While it is technically possible to spec a Model 3 so that it hits that price point, consumers have to make many compromises, and such cars are not available in many locations. 

The new vehicle – whatever the company decides to call it – will seek to correct that failing. A $25,000 electric vehicle would compete directly alongside existing ICE cars, opening up the market to countless more consumers. 

The introduction of the Model 2 would make a lot of sense, given the company’s “top-down” approach to dominating the auto market. 

Tesla first began with the ultra-expensive Roadster sports car as a proof of concept for battery-electric road vehicles. It then created the Model S – an executive car that offers a massive range and the most impressive performance in its class. After that, it made the Model 3 and Y – both of which are still in the premium segment, but not quite as expensive as the S. 

This new vehicle would be Tesla’s first genuinely mass-market car. If introduced, the EV maker would way ahead of its competitors. Many have no response. 

Many investors weren’t impressed by Battery Day and saw it as something of a gimmick. The company didn’t introduce any game-changing new technologies in their view, which dampened spirits in the market. 

However, what many missed was the cumulative effect of all the technological improvements that Tesla has made. The company has almost single-handedly halved the production costs of batteries and electric vehicles, enabling it to bring them to the masses in a way that simply wasn’t possible in the past. 

If the economics of the Model 2 work, then practically every taxi and business fleet in the country will switch to the vehicle. Thus, we can expect to see these vehicles in car wraps, advertising products and services. 

If the company can make the car sexy, we can also expect millions of consumer-facing sales too. According to ARK Invest analysts, Tesla’s production could reach fifteen million vehicles per year in just five to six years. 

Photo Credit: Tesla

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