Tesla Plans to Produce 4M Low-Priced Vehicle Models Annually

Multiple industry insiders said Tesla is planning a grand production capacity for its future low-priced model, according to a report by 36Kr on April 4. “The new model will be a smaller version of the Model Y,” an insider said, “and Tesla is planning an annual production capacity of up to four million vehicles.”

According to the report, Tesla is implementing an early production strategy and sharing it with their supply chain. The global factories will have a total capacity of four million vehicles, with two million being produced in North American Tesla factories and one million each in the Berlin, Germany and Shanghai factories. In North American factories, the firm’s plant in Monterrey, Mexico will be the main producer of this new model.

News about Tesla’s low-priced model has been circulating on the market for some time, first disclosed by CEO Elon Musk in 2020. At that time, Tesla announced plans to expand production of its self-developed battery technology and Musk said that by 2023, this would make it possible to sell autonomous driving electric cars priced at $25,000.

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Since then, news about this model has circulated under names such as “Model Q” and “Model 2,” but there has been no actual information from the company until Lars Moravy, Tesla’s chief engineer reiterated at the Investor Day event in March that the company hopes to manufacture “next-generation” cars at half the cost of either Model 3 or Model Y.

In addition, according to sources familiar with construction progress at factories, the mass production of a 150,000-yuan ($21797) car may not come soon. “It could take more than a year before it arrives.”

Industry analysts believe if Tesla can lower prices of electric vehicles below 100k yuan, not only will the company capture significant market share but also provide huge impetus towards maturity across the entire supply chain. The intelligent EV industry will undergo drastic changes.

On January 6 of this year, Tesla reduced the prices of its models manufactured in China. The starting price for the Model 3 decreased to 229,900 yuan, the lowest in history. This quickly boosted Tesla’s sales volume. In Q1 2023, Tesla delivered a record high of 422,875 electric vehicles, up 36% year over year and 4% month over month.