Tesla plans to launch affordable 25,000-euro car in Germany: Media reports

Tesla, the electric vehicle pioneer, is reportedly gearing up to produce a more affordable electric car with a price tag of 25,000 euros (approximately $26,838) at its factory located near Berlin, a Reuters report said, citing an anonymous source familiar with the matter. The development signals a significant move for Tesla as it aims to promote wider adoption of its electric vehicles.

The source, who opted to remain unnamed, did not specify when production of the affordable model would commence. Tesla declined to provide official comments on the matter. In response to this news, Tesla's shares experienced a 3 per cent increase in pre-market trading in the United States at 0910 GMT.

The relatively high cost is impeding the widespread adoption of electric carsin Europe and the United States.Moreover, the cost of electric cars have been compounded by elevated interest rates. In the first half of 2023, the average retail price of an electric vehicle in Europe exceeded 65,000 euros ($69,000), as reported by automotive research firm JATO Dynamics. In contrast, the average price of an electric car in China was just over 31,000 euros ($33,000).

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Tesla's CEO Elon Musk has beenexpressing his desireto develop a more affordable electric car. In September, insider sources revealed that Tesla has made significant progress in the development of an innovation that would enable the casting of nearly the entire underbody of electric vehicles in one piece. This advancement would lead to increased production efficiency and reduced costs.

Tesla's strategy to expand into the mass market is crucial in achieving its goal of delivering 20 million vehicles by 2030, setting it apart from competitors like Volkswagen, a company which hasfocused on preserving profit margins during the electric vehicle transition without setting specific delivery targets.

CEO Elon Musk recently visited the Tesla plant in Gruenheide, Germany, where he revealed plans to produce the 25,000-euro vehicle at the German plant, marking a significant development in the company's strategy. The Gruenheide plant currently manufactures the Model Y, which is the best-selling electric vehicle in Europe.

Tesla has intentions to double the manufacturing capacity of its German plant, with the goal of producing up to 1 million vehicles annually. The company has not released updated production figures since March when it announced the production of 5,000 vehicles per week, equivalent to approximately 250,000 vehicles annually.

Local authorities in Germany have requested additional information from Tesla regarding how their expansion plans align with conservation laws. A decision on whether to approve the expansion is pending, with no specific timeframe provided.

Furthermore, Tesla announced a fourper cent wage increase for all employees, effective from November onwards. Production workers will also receive an additional 2,500 euros ($2,600) per year starting from February 2024, representing an 18 per cent pay increase over a one-to-one-and-a-half-year period. German union IG Metall had previously noted that Tesla's wages were approximately 20 per cent lower than those offered under collective bargaining agreements at other car manufacturers.

(With inputs from Reuters)

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