It looks like Tesla is gearing up to launch a budget-friendly EV soon – if Elon Musk’s latest update is anything to go by.
During Tesla’s recent earnings call, Musk confirmed plans to bring more affordable electric cars to the market, with production kicking off in the first half of 2025.
Details are scarce, but rumours suggest the first affordable model will start around £28,000 and be based on the Model 3 (or maybe the Model Y).
Tesla has been talking about making cheaper EVs for a while now. Back at the Cybercab concept reveal last year, the company mentioned they were working on new vehicles, including more affordable models, which will roll out in 2025.
While the timeline could change, the goal to make EVs more accessible seems solid. Tesla’s cheapest UK car right now is the £39,990 Model 3, which is £24,995 more than the UK’s cheapest new EV, the Dacia Spring, priced at £14,995.
Sure, there’s a difference in quality, range, tech, and all the other features, but the price gap shows that budget EVs are possible. A wave of affordable EVs is hitting the market, with brands like Renault, Citroen, Cupra, VW, and Fiat launching models under £25,000 this year. For example, the new Renault Twingo will cost around £17,000.
The new Tesla model, which some are calling the “Model 2” (likely a hatchback version of the Model 3), will probably be priced in the mid-to-upper £20,000s. While it won’t be under £20,000, it will still make Tesla a more competitive option in the budget EV market. Plus, it could be a sign of even cheaper Teslas down the line.
This move will also help Tesla keep up with the influx of affordable Chinese EVs from brands like BYD and MG, especially since Tesla recently lost its spot as the world’s largest EV maker to BYD. In 2024, Tesla’s sales dipped for the first time in over ten years, dropping to 1.79 million cars.
Despite aggressive price cuts, Tesla’s sales fell last year, with the UK seeing price reductions of up to £9,100 in January 2023.
Moving into more affordable EVs could help Tesla regain its momentum, especially after Musk revealed the cheaper model alongside news that the company had missed its Q4 2024 revenue goals.
Musk has also emphasised the need to make EVs affordable for everyone and bring down the total cost of ownership per mile to compete with all types of transportation.
If the lower-cost Tesla does make it to market this year, it’ll face competition from the £26,995 MG 4, which is similar in price and style.
