Tesla finally delivered the Cybertruck this year as promised, and the next waypoint is the production of its next-generation EV model. Initially planned to start production in Mexico, the $25,000 EV is now slated for production at Giga Texas, as confirmed by Elon Musk during an interview with "teardown titan" Sandy Munro.
The development of an affordable Tesla EV has been rumored for a few years. However, the pandemic and the supply chain mayhem that followed made Elon Musk consider the low-cost EV as an unnecessary distraction. He famously said that Tesla has "more than enough on its plate" to start work on a cheap model.
Those were the times when car prices went through the roof, and the most affordable Tesla EV, the Model 3 SR, started at $47,000. Even so, Tesla could not produce enough of them, so a more affordable model would not have made sense.
Things changed quickly in 2023 when Tesla reversed the price hike trend with the highest price cuts the automotive market has ever seen since the Ford Model T era. Many thought the discounts were in line with Tesla's mission to bring to market electric vehicles everyone could afford. However, it was about the same time that demand for Tesla EVs (and cars in general) waned. It was also when Elon Musk revived the idea of an affordable EV.
As revealed later by Walter Isaacson in his book about Elon Musk, Tesla's CEO reluctantly agreed that an affordable EV makes sense to expand Tesla's addressable market. What convinced him was the possibility of building the low-cost model on the same platform as Tesla's upcoming robotaxi, spreading the development costs for Tesla's next-generation platform.
Photo: Tesla
Tesla planned a completely new gigafactory for the high-volume EV and announced plans to build Giga Mexico in Nuevo Leon. The new gigafactory would employ a revolutionary manufacturing process called "unboxed vehicle," aimed to increase efficiency and reduce factory footprint. Unfortunately, Giga Mexico plans were put on the back burner as unexpectedly as they were announced.
Despite Tesla claiming that the plans for the Gen-3 EV platform have been finalized, it did not offer any update on the Gen-3 vehicles or Giga Mexico. Recent footage from the factory location in Monterrey, Mexico, shows that nothing has changed on the ground, and no groundbreaking ceremony has been announced. The latest information points to Tesla building the unboxed-vehicle production line at Giga Texas instead, where the next-gen EVs will also start production.
This move was thought to accelerate the development, as Giga Texas is already operational. Musk implied that the affordable EVC might start production before Giga Mexico is up and running. Still, the fact that no stone was moved since the Giga Mexico announcement shows that Tesla might have second thoughts about the factory.
In a recent interview with Sandy Munro, Elon Musk reaffirmed plans for the low-cost EV, saying the EV maker is "quite far advanced" in developing the high-volume EV. Musk also confirmed that the affordable model will be first produced at Giga Texas, with the upcoming Gigafactory Mexico being the second manufacturing facility.
Musk also said that Gigafactory Berlin will eventually build a low-cost car. With Germany's high wages and utility prices, this does not make much sense. However, another factory in Asia, possibly in India, would be more appropriate to build an affordable EV. You can watch the full interview below, with the discussion about the affordable EV starting about 30 minutes into the interview.
After his childhood dream of becoming a "tractor operator" didn't pan out, Cristian turned to journalism, first in print and later moving to online media. His top interests are electric vehicles and new energy solutions. Full profile
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