By LIU Jiaxin, ZHOU Shuqi
EV maker Tesla is making plans for a new, even lower-priced model, business media 36kr reported. The Tesla’s factory in Shanghai is expected to produce about a million of the new vehicles, about a quarter of total annual production. The rest will be made in Europe and North America.
Tesla didn’t respond to Jiemian News’ inquiries, but a supplier said the new model would be released in 2025, whether it is a SUV or a Hatchback is still being decided.
Sina Finance sources expected the new model to be a smaller version of the Model Y, priced around $25,000 (around 170,000 yuan). Tesla hasn't set a price yet, but has said the new model would cost half as much to make as the Model Y. If Tesla offers a compact EV at that price, it could transform the automotive industry, again.
Tesla delivered 423,000 cars in Q1, up 36 percent year on year, and rated by the market as a pretty poor showing – well down on estimates. Models S and X failed to find enough customers in their respective segments and price brackets. The increase in deliveries was mainly a result of greatly reduced prices.
Elon Musk once said that demand for Tesla cars is infinite. It's just that not everyone is willing to pay the price. Tesla has itself very willing to lower prices at every turn to accelerate sales and can be expected to do it again.
Last October, Tesla lowered prices for its Model 3 and Model Y cars in less than a month after denying any intention to cut prices. Then, in early January, Tesla did it again, cutting the prices of the Model 3 by 6 percent, and the Model Y by 13.5 percent.
Tesla enjoys some of the biggest margins in the auto industry, which allows it to play with pricing if it wants to make its cars more attractive to buyers. But ten days later, XPeng dropped prices. NIO began price cuts in early February. BYD reduced prices in February and March. Ford, Toyota and Volkswagen prices have all been cut in recent weeks.
Many investors believe that despite delivering more and more cars each year, the reduced prices will eat away at Tesla’s profit margin in the long run.
Tesla shares dropped 6 percent on Monday, wiping out US$40 billion of market value.
