Everything we know about the $25k Tesla car (Tesla Model 2)

Update: Auto illustrator Giorgi Tedoradze of tedoradze.net has created renderings of the rumored Tesla Model 2 in a sedan body style.

The rendered Tesla Model 2 sedan features Model 3-inspired front and rear sections but in a more aggressive design. The slimmer and more aggressive headlamps, for instance, adopt the look of the next-gen Tesla Roadster’s three-eyed headlamps. The roof is flatter than that of the Tesla Model 3 for a proper sedan character. In reality, the Tesla Model 2 will probably be a hatchback.

Tesla Model 2 render
Image: Giorgi Tedoradze

ElectricVehicleWeb.in has seen a new Environmental Impact Assessment document about the expansion of the Tesla Gigafactory Shanghai that was released in February. The document’s project name reads: “The second phase of the Tesla Gigafactory Project (Phase I).” It says that after completion of the project, “the production capacity of Model 3, Model Y, and related derivative models will be added.”

The document mentioning “related derivative models” is spreading rumours on the web that the $25,000 Tesla car, possibly the Tesla Model 2, will be based on the same platform as the Tesla Model 3 and Tesla Model Y. It is speculated that it could be the hatchback version of the Model 3.

Meanwhile, auto.sina.com reports that “it is estimated that” the first batch of models will be tested on the road soon, for trials. It also says that the unveiling is expected during the second half of the year and that the Guangzhou Auto Show is the most likely hosting the world premiere. However these claims are to be taken with a pinch of salt as Tesla has not hinted about working on a concept or premiere.

Tesla is on a hiring spree in China for the Gigafactory Shanghai, as per a report from cnevpost.com. A post on Shanghai Pudong New Area’s WeChat account shows that there are Tesla job openings in 30 categories of positions in seven departments. While this could be attributed to a planned production ramp-up of existing models (Tesla Model 3 and Tesla Model Y), the decisions could be taken keeping in mind the $25,000 Tesla Model 2, which is also likely to be manufactured at the Chinese factory.

At the 2020 Annual Shareholder Meeting and Battery Day, Tesla confirmed two new electric cars. The first Tesla electric car would make the brand more accessible with a lower-than-ever price tag of $25000.

$25000 Tesla Model 2 and Tesla Robotaxi
The Tesla small EV, possibly the Tesla Model 2, and the Tesla Robotaxi, could debut by the end of 2023. Image Source: Tesla

In its presentation, Tesla revealed plans to launch a compact Tesla electric car and a Tesla Robotaxi. These new Tesla cars would be smaller than the Model 3, currently the smallest and most affordable Tesla EV. Below is what Elon Musk, co-founder and CEO of Tesla, said about the new entry-level electric car:

We are confident that in the long term we can design and manufacture a compelling $25000 electric vehicle. This has always been our dream from the beginning of the company.

Elon Musk, co-founder and CEO, Tesla

Speaking further, Musk suggested that Tesla won’t skimp on the $25000 electric car when it comes to the best of its driving assistance technologies. He confirmed that even the $25000 Tesla electric car will offer hands-free autonomous driving. More importantly, he indicated the possible $25000 Tesla release date. Below were his words:

I think probably in about three years from now, we are confident we can make a very compelling $25000 electric vehicle that’s also fully autonomous.

Elon Musk, co-founder and CEO, Tesla
$25000 Tesla Model 2 Tesla battery cathode strategy
The $25000 Tesla will likely feature Lithium Iron Phosphate battery pack. Image Source: Tesla

Tesla is taking a diversified cathode approach for its electric vehicles. It plans to offer entry-level models like the yet-to-be-named $25000 Tesla, with Iron-based battery packs. This would lead to not only lower cost of battery pack but easy availability of the same and thus fewer supply constraints compared to battery packs with Nickel, if at all.

In order to scale, we really need to make sure that we are not constrained by total Nickel availability. I actually spoke with the CEOs, the biggest mining companies in the world, and said please make more Nickel because it’s very important. And, so, I think they are gonna make more Nickel. I think we need to have a kind of a three-tiered approach to batteries. So, starting with Iron that’s kind of like a medium-range, and then Nickel-Manganese that’s sort of a medium-plus/intermediate, and then high-Nickel for long-range applications like Cybertruck and the Semi.

Elon Musk, co-founder and CEO, Tesla

Tesla has already developed a Model 3 with a Lithium Iron Phosphate battery pack for China. The $25000 Tesla or the alleged Tesla Model 2 arriving around 2023 could be a small hatchback or SUV with Europe and China set as the main target market. Its manufacturing could take place at both Tesla Gigafactory Shanghai and Tesla Gigafactory Berlin. The Tesla Robotaxi could be a taxi derivative of the same, primarily for Europe.

Musk hinted about the so-called Tesla Model 2 in July 2020

Elon Musk, Co-Founder & CEO, Tesla, said at the Q2 2020 earnings call last year that it is reasonable to assume that the company “would make a compact vehicle of some kind” in the future. However, he indicated that such a product, if given the green signal, is still a few years away from going on sale and the Cybertruck, Roadster and Semi are the company’s next new projects. At the same event, Musk said that a higher-capacity variant of an existing Tesla model could be expected.

$25000 Tesla Model 2
The USD 25,000 Tesla model would be a gamechanger for the company. Image Source: Tesla

The fact that Tesla electric cars still aren’t affordable enough is troubling Musk, and he acknowledged that is something needing a fix. One example is the Tesla Model 3’s new cheaper iron phosphate battery pack in China, as stated above. One can expect Tesla to take several similar measures to bring down the price of its car range.

Instagram channel FutureCarsNow posted an interesting rendering of a ‘compact model’ from Tesla Motors, shown below. At the company’s shareholder meeting in 2018, Elon Musk, on the topic of expanding the brand into new segments, said “I think we’ll do a compact car in less than five years.” Since then Tesla has not confirmed that a car smaller than the Model 3 is in the pipeline (the Cybertruck, Roadster and the Semi are the ‘known’ future models) but it is interested in developing a vehicle in China for worldwide consumption as well.

Tesla is setting up a Chinese design centre where we expect not one but a family of models to be designed in the coming years considering the demand for EVs in the Chinese market, and a low-price electric car, which could be the biggest challenge yet for the company, could drive adoption of electric vehicles in emerging markets where Tesla has a high level of aspiration and respectability.

In February, tech.ifeng.com reported that Tesla is in the hunt for a design director in China to open a Tesla design centre in Shanghai or Beijing. Franz von Holzhausen, Tesla’s chief designer, has already interviewed some candidates, it was reported.

Tesla started deliveries of the made-in-China Model 3 in January 2020 and at the event, Elon Musk, CEO of Tesla Motors, revealed that the company would start a design studio and an R&D centre in China for indigenized products. The vehicle designed in China could be a compact crossover smaller than the Model 3 instead of a hatchback.

Tesla had then published an interesting new design sketch of what auto sleuths dub the ‘Tesla Model 2’ hatchback with a short wheelbase, strong shoulder line and a coupe-style roof. The release was part of Tesla’s official announcement in its WeChat account calling for people to apply for jobs at the upcoming design and engineering centre.

Reports had already speculated that Tesla Motors will build an entry-level car, positioned below the Model 3 (that starts at about USD 35,000 in the USA), in China at the Gigafactory 3 plant and export it to markets including Asia where existing Tesla cars are very expensive to bring any real volume or disrupt the market.

I think something that would be super cool would be to create a China design and engineering centre to actually design an original car in China for worldwide consumption. 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.

Tesla CEO Elon Musk, at the Tesla Model 3 delivery event in China in January 2020

Tesla has four models on sale – Model S, Model X, Model Y, and Model 3. It has showcased Roadster, Semi Truck and Cybertruck and all models are estimated to meet production by end of 2022.

Image Source: youtube.com/Tesla; display image from Chinese social web