What and When Will the Tesla “Low-Cost” Vehicles Be?

By Edward A. Sanchez — April 27, 2024

A few weeks ago, I wrote a post offering my opinion that the cancellation of the so-called “Model 2” or Tesla’s long-rumored low-cost vehicle in favor of a “robotaxi” concept wasn’t an either/or proposition, following up on sensationalistic coverage and opinions based on a Reuters story. While those outside of the inner sanctum of Tesla executive management don’t know the full story, I feel somewhat vindicated following the 2024 Q1 earnings call.

The initial Reuters story claimed that the company had halted further investment on projects codenamed NV91 and H422, believed to be the low-cost vehicle and “robotaxi” platform. In the earnings call and accompanying release, the company outlined its change in strategy in its low-cost vehicle plans:

“We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025.

These new vehicles, including more affordable models, will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.

This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more CapEx efficient manner during uncertain times.”

What this tells me is that the company is taking a “Work with what you’ve got” rather than a “Reinvent the wheel” approach.

In January 2024, Tesla showed its “unboxed” approach to manufacturing, which it claims will drastically improve efficiencies and dramatically decrease redundancies in the current manufacturing model, which consists of components being assembled and disassembled at various points in the manufacturing process, adding unnecessary man-hours and inefficiencies in the production process.

It is essentially an evolution of the process it is employing on some Model Y models, in which the seats are mounted to the battery pack and raised up into the chassis, as opposed to the traditional method, still employed on some of its models, of the doors and trunk/hatch being painted, then removed, the interior being installed, and then the doors being re-installed.

While this may not be the full-fledged “unboxed” process the company is aiming for, it is a process that the company is familiar with, and is continuing to evolve.

So what will these “low-cost” models look like? Here are a few possibilities:

De-contented versions of the Model 3 and Model Y
As detailed in Episode 168 of The Watt Car Podcast, this is co-host Phil Royle’s favored hypothesis. There is some merit to this belief. Many features were added to the 2024 “Highland” refresh of the Model 3, including ventilated front seats and a rear touchscreen display. These could be removed to create a lower-cost Model 3, along with single-pane glass, basically reverting to the pre-refresh specification in some respects.

Slightly downsized variants of the Model 3 and Model Y
Although the Model 3 and Model Y aren’t necessarily large by North American standards, they’re on the bigger side by global standards. A downsized Model Y, or a Model 3 liftback would appeal to many around the world.

Evolution of the Gigacasting/Battery Skateboard concept
This concept is not necessarily exclusive of the above two scenarios. As I suggested in my previous post, I think that the steer-by-wire system pioneered on the Cybertruck will soon migrate across Tesla’s lineup, along with a move to a predominantly 48V low-voltage electrical architecture. Likewise, this will also enable production of the robotaxi on the same platform.

Phil and I have joked about “Tesla Time,” and it’s entirely possible that even after the promised August 2024 reveal, the robotaxi and compact model could be years away from production, despite the promise that it will start production sometime in “the second half of 2025.”

For that, check back with The Watt Car in August, and the second half of 2025.

(Image courtesy Tesla)