The competition for low-priced electric cars is intensifying.

Tesla's news about its entry-level new car has come in waves, and Model 2 is still alive in rumors.

Musk announced the latest pure electric platform and related models at Tesla's Investor Day a long time ago, and stated that the new platform after technological upgrading will reduce manufacturing costs by 50%, shorten manufacturing time by 40%, and produce a new car every 45 seconds in the future. The manufacturing cost of new cars built on the new platform is expected to be about 37% lower than that of Model 3, and the price will be lower. To differentiate, the styling and size of the new car will be changed from the currently sold models.

Based on a series of speculations and leaks, media outlet CARSCOOPS created a set of renderings of Tesla's Model 2, which is neither a downgraded Model 3 nor a downgraded Model Y, but a brand new form that retains Tesla's familial design style and a modern body posture.

There are also reports that this model is still in the development process and may take several years before it can achieve mass production and launch.

However, Tesla's Cybertruck has been delayed for years due to issues such as cost control, manufacturing processes, and production capacity. The model, which was unveiled in 2019, only began mass deliveries in 2023. Before Model 2 is launched, Tesla must first resolve a series of issues with the new platform, which could take several more years of effort. With this development pace, it's unclear how much advantage Model 2 will retain after its launch.

Entry-level Model, Tesla's next big move

The Tesla Model 2 renderings created by CARSCOOPS provide two relatively critical pieces of information: a five-door hatchback coupe styling and split headlights. Model 2 is expected to have an overall length of 3990mm, a curb weight of 1400kg, and a driving range that is "slightly lower" than Model 3.

The new car under the new platform boasts significantly optimized assembly efficiency and cost, more advanced technology, and higher integration, laying the foundation for Tesla's entry-level new car.

For reference, the Wuling Bingguo has a body length of 3950mm, indicating that Model 2 is an A0-class pure electric vehicle. The five-door hatchback styling is mainstream in this class, but Model 2 also retains many design elements from Tesla's Model 3 and Model Y, such as the iconic streamlined styling and front and rear designs. The front face features split headlights, but it's unlikely that this design will be used due to the additional manufacturing costs associated with an extra set of components.

However, aside from Model 3 and Model Y, Tesla's other models do not share familial design elements. Based on this observation, there may be significant differences between the actual Model 2 and the rendered images.

A0-class pure electric cars are compact and flexible, meeting the commuting needs of most people at a low price, making them consistently top sellers. In China, BYD Dolphin sells over 8,000 units per month, while BYD Seagull, a similar-class model, has sold nearly 250,000 units cumulatively in 2024, with 46,830 units sold in September alone, surpassing Tesla Model Y in terms of volume.

Overseas, MG4 EV from SAIC Motor Group has also gained significant attention, with global sales exceeding 130,000 units in both 2022 and 2023, and 34,827 units sold overseas from January to May 2024. This model is a sales champion in some markets, known for its low price, practicality, and impressive handling. There is ample room for growth in the A0-class pure electric vehicle segment, but Model 2 faces competition from vehicles like Volkswagen ID.3 and Renault Megane E-Tech in the same class.

There is also speculation that Tesla may focus more on developing Robotaxi. Based on current information, this is also a large-scale model from the new platform equipped with full autonomous driving capabilities, eliminating the steering wheel, pedals, and rearview mirrors. Tesla has officially announced that there will be a major announcement on October 11 and released a poster containing the word "ROBOT," suggesting a significant move is in the works.

The low-priced electric car market is fiercely competitive, leaving Model 2 in an awkward position?

Returning to Model 2, Lei Technology believes it's in an awkward position.

Cybertruck was first unveiled in 2019 and has received up to 2 million orders (including domestic orders), but the production issues arising from its high level of innovation have held Tesla and the model back for four years. Due to its unique materials and vehicle architecture, the production cost of Cybertruck is high. Musk has stated that while the Cybertruck pickup truck sells for 450,000 yuan, its current cost is as high as 6 million yuan, leading Tesla to focus on cost reduction during these years of delays.

Considering Model 2's positioning, it's foreseeable that the overall quality and features will be controlled at a very entry-level standard, earning it the nickname of a "rough house."

Tesla's industrial system is highly advanced, and the specificities of Cybertruck cannot be generalized to Model 2. However, based on experience, Tesla's new platform and models may not proceed smoothly, and various issues requiring troubleshooting and optimization may arise during development. Furthermore, Tesla has its own pace for launching new products, and it's unlikely that the pace will be accelerated due to the intense competition in the automotive market. Musk has confirmed that the entry-level pure electric model will be launched next year.

The reality is harsh, and time waits for no one. While Tesla is quietly preparing its big move, its competitors are continuously laying out products at various price points. As mentioned earlier, MG4 EV, which has high sales, and vehicles like Volkswagen ID.3 in the same class stand in the way of Model 2. The domestic market also boasts powerful products like Geely Xingyuan, BYD Seagull/Dolphin, and Wuling Bingguo, making Model 2 not the only option.

Not to mention that at around 100,000 yuan, one can also purchase models like Qin L and Seal 06 DM-i, which are close in size to B-class cars. More expensive options include XPeng MONA M03 and Aion AION RT, with the number of options still growing. Some automakers even have overseas expansion plans, and some new cars are already designed with global demands in mind during development.

Competitors' overseas expansion efforts are becoming more frequent, exerting intangible pressure on Model 2, which has yet to enter mass production. With low price and the Tesla brand as its selling points, Model 2 is poised to achieve significant sales volumes. However, time waits for no one, and low price and brand influence cannot constitute a sustained competitive advantage. Unless Tesla can introduce a killer application like FSD to differentiate itself, there is still a chance.

Even the benchmark of electric vehicles urgently needs new growth points

Until now, Model 3 and Model Y remain global benchmarks in the pure electric vehicle market. Even though they haven't been replaced for years, they continue to sell well, with Model Y consistently ranking at the top of pure electric SUV sales in China. Many new products claiming to be "Model Y killers" have failed to unseat it, demonstrating Tesla's brand influence and benchmark status.

However, over the years, domestic brands and traditional automakers have mounted fierce competition, offering a wide range of price points and ample choice. They have also made rapid progress in smart cockpits and autonomous driving, resulting in comprehensive product competitiveness that is not inferior. Tesla has relied heavily on Model 3 and Model Y for sales, failing to make significant strides in higher-end products or introduce low-priced models in a timely manner. There have also been no notable upgrades or increased sincerity in the facelift models.

There were rumors that Tesla planned to produce a seven-seater version of Model Y to boost demand, but the company quickly denied this, as seven seats are a contrived selling point that is unlikely to significantly boost sales. Additionally, the Cybertruck pickup truck is not a mass-market product, meaning that after Model Y, Tesla has not created another phenomenal hit.

Musk's vision is to phase out gasoline-powered vehicles, which cannot be achieved solely with these two models. The demand in lower-end markets is greater, and gasoline-powered vehicles sell primarily in entry-level price segments. Model 2 will have a more significant impact on the overall gasoline-powered vehicle market, but it will also shoulder heavier responsibilities. According to predictions, Model 2's annual production scale will reach 2-3 million units, making it a new growth point for Tesla.

The problem is that there is very little information about Tesla's entry-level electric car, and the company rarely releases any progress or news about the new model, which is frustrating for many. Based on various speculations, Model 2 is merely low-priced and high-volume, which does not necessarily translate to high cost-effectiveness. With an unclear timeline for mass production and launch, it's feared that market expectations for the model may further diminish.

October 11 could be a crucial day, as it may hold the key to Tesla's cheapest model.

Source: Lei Technology