Tesla Readies Affordable Model Y Variant
Tesla is reportedly gearing up to unveil a new, more affordable electric vehicle. According to a recent report originating from China, the new EV is essentially a simplified or ‘decontented’ version of the Model Y.
This project isn’t entirely new; it represents a strategic pivot by Tesla. Over a year ago, CEO Elon Musk cancelled plans for two cheaper vehicles, often dubbed the “$25,000 Tesla.” Originally codenamed NV91 and NV92, these vehicles were to be built on a new platform, now earmarked for the Cybertruck. However, in response to demand issues affecting its Model 3 and Model Y production lines, Tesla reassessed its strategy.
The company decided to abandon the new platform and instead adapt the existing Model 3/Y platform for new vehicles, capitalizing on its established production infrastructure.
A recent report from 36Kr, a Chinese tech media outlet, corroborates earlier reports, referencing a new, similar model Y variant Tesla intends to produce at its Gigafactory Shanghai. The publication describes the vehicle as a “lower-priced Model Y.”
“People familiar with the matter told 36Kr that the new model is a ‘lower-priced Model Y’. Compared with the current Model Y, the new car’s battery, power and chassis have basically not changed much,” the report stated, as translated from Chinese.
The report draws parallels to the revised version of the Model 3, initially released in Mexico last year. This model maintains core features but omits certain elements, such as a second-row screen and ambient lighting. It also employs fabric interior materials instead of Tesla’s usual vegan leather. Priced at the equivalent of $35,000 USD in Mexico, the cheaper Model 3 sells for approximately $4,000 less than the original.
The 36Kr report also mentions a “depop” or “decontenting” approach to the Model Y-based vehicle. “It is developed through depop,” the report indicated.
“People familiar with the matter revealed that depop is a development idea within Tesla, which is to achieve the rapid launch of products by simplifying the configuration while keeping the main functions unchanged.”
The 36Kr report’s information derives credibility from its source’s reference to the change in internal codenames to letters and numbers, earlier reported by Electrek.
According to the report, Tesla is expected to launch this new, cheaper model in China during the second half of this year, its release dependent on the success of the refreshed Model Y in the region:
“The launch time of these new models will depend on the order performance of the renewed Model Y. If the new Model Y does not perform as expected, Tesla is expected to launch this “cheaper Model Y” in the second half of this year.”
Furthermore, the vehicle is expected to release in other markets, since Tesla’s Model 3 and Model Y production lines in the U.S. and Germany are also reportedly currently operating below capacity.
Electrek’s Take
Analysts advise investors not to anticipate this simplified model offering a financial “silver bullet,” as sales are anticipated to negatively impact current Model 3/Y sales figures. This management error highlights Elon Musk’s decisions concerning the $25,000 model reliant on next-gen platform, while concentrating on “self-driving is just around corner.”
The strategy underlines Tesla’s efforts to fully use its production lines that, for a while now, have been operating with partial capacity. However, the company’s gross margins might decline more intensely than they already have over the past two years.
