Author: Erchai

Every price cut from Tesla strikes a chord with fans. Just a few days ago, the Standard Range Plus version of the Model 3 received a price cut of ¥15,000, now selling for ¥235,900. Many couldn’t resist the temptation and went ahead and placed their orders. With such a low price, it’s no surprise that Model 3 sales are on the rise once again.

If you think that ¥235,900 is already the lowest price for a Tesla, then your perspective is too narrow. According to reports from foreign media, Tesla has revealed on several occasions that it’s developing an entry-level model that is positioned and priced below the Model 3.

In fact, this entry-level model has been on the horizon for quite some time. Previously, Chinese media reported that Tesla’s China president Zhu Xiaotong clearly stated in an interview that Tesla is developing a more affordable model that is aimed at the mass market, with an expected retail price of ¥160,000.

Musk himself has also said at Tesla’s Battery Day in 2018 that he plans to release an entry-level Tesla priced at $25,000 within three years. The timeline is perfect, which means that the ¥160,000 Model 2 is not far away from us.

As for more specific timing, an automotive media outlet on Weibo revealed that “the Tesla entry-level model is not a smoke bomb, as most suppliers have been negotiated with and small-scale production will begin by the end of this year.” It is likely that we will see this car at the end of this year or early next year.

Tesla as a brand has always been tight-lipped and has very few public relations ads. Price cuts are usually unheralded, relying on the buzz generated by its products to be conveyed by the media. Therefore, if it suddenly announces a new car or puts a new car online, it’s completely within the realm of possibility.

Let’s talk about this entry-level new car, which may be named the Model 2 (but maybe not because Musk himself said he doesn’t like this name). The most mainstream view is that this new car is positioned as a compact two-door hatchback. Previously, there have been renderings of the new car (probably conceptual).

The exterior design of the new car still looks like a family-style design, and the chassis will be based on the Model 3.

One thing that’s different from previous Tesla models, including the Model 3 and Y, is that they were designed in the United States before being introduced to China. The Model 2 will be locally designed in the Chinese market and then manufactured and sold globally.Tesla previously announced that its R&D center in Shanghai would be delivered in mid-2021. This is Tesla’s first R&D center outside the United States. The center’s initial mission is to design, develop and produce an original model in China. Without surprise, this car is the Model 2 which we are talking about today.

Regarding the Model 2, the most important thing is the price and performance parameters. Information about the car’s battery and motor is still unclear. It cannot be ruled out that the 4680 battery that Tesla has been talking about will be used (some also say it will use Blade battery from BYD). As for the price, as an entry-level model priced lower than the Model 3, a low price is already certain. The price range is likely to be between 160,000 and 200,000 yuan (consistent with Tesla’s previously mentioned $25,000 electric car).

Many people say that two-door cars will not be popular in the Chinese market, but it depends on who makes the two-door cars. Tesla has experienced such a big controversy in the first half of the year. The Model 3, starting at 235,000 yuan, sold more than 20,000 units in a month, and the Model Y, starting at 276,000 yuan, sold more than 10,000 units in a month. The data has already illustrated a lot of issues. The Model 2 priced at 160,000 yuan, with lower costs and wider acceptance, there is no possibility of poor sales (under the premise of no major issues).

Tesla is still commendable in terms of pricing, as they have always emphasized that price reductions are normal pricing, and prices will continue to decrease in the future. This is a great news for consumers, but it won’t be easy for NIO, Xpeng, and Li Auto.

NIO and Li Auto are still okay, as they currently do not have very strong positive competition in car models. However, with such a cheap Tesla, it will inevitably grab a part of Xpeng’s entry-level sedan consumer group (Xpeng P5’s pre-sale price is also 160,000 yuan). In the future, it will be difficult for the new forces of the three giants to compete with Tesla in the entry-level car models.

This article is a translation by ChatGPT of a Chinese report from 42HOW. If you have any questions about it, please email bd@42how.com.