Tesla Is Reportedly Planning To Build A Sub-$27,000 Car At Its Berlin Factory

Topline

Tesla is planning to build a new electric car model that will be priced at around $25,000 from its factory near Berlin, Reuters reported Monday, making it the company’s cheapest offering that could allow it to compete against budget EV makers from Europe and China.

The Tesla Gigafactory Berlin-Brandenburg will reportedly build a new $27,000 electric car.

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Key Facts

According to Reuters, Tesla is aiming for a $26,800 (€25,000) price point for the car, although it is unclear if it will be an entirely new model or a cut-down version of an existing one.

The plan to build this lower-priced car was reportedly discussed last week when Tesla CEO Elon Musk visited the Berlin-Brandenburg Gigafactory located in Gruenheide, which makes the Model Y.

The company believes it is close to achieving a manufacturing breakthrough that would allow it to cast the underbody of its cars as a single piece, resulting in lower costs, the report added.

Tesla’s current cheapest car in the EU is its Model 3, starting at $46,200 (€42,990).

Key Background

Musk has long hinted at a plan to build lower-cost electric vehicles but his company has stopped short of actually unveiling any concrete plans. But the latest reports come amid a slew of new low-cost EVs entering the EU market. Earlier this year, Volkswagen showed off concept designs for a $27,000 (€25,000) electric car called ID.2all that the company said will launch in 2025. French carmaker Renault’s Dacia Spring EV, which is made in China, is touted as the EU’s cheapest electric vehicle and its prices start at $21,500 (€20,800). Last month, Stellantis announced the launch of its Citroen e-C3 priced at $25,000 (€23,300) and promised the launch of a sub-€20,000 ($21,500) model in 2025. European car majors aside, Tesla also faces competition from Chinese makers like BYD. Earlier this year, the bloc approved a law that will ban the sales of carbon-emitting vehicles from the region starting 2035.

Tangent

Musk’s plans to build a new model come amid Tesla’s efforts to placate its German workers on wage issues. On Friday, the company announced a 4% pay hike for workers at its Gruenheide plant, along with an additional $2,688 (€2,500) raise for production workers. The workers will also receive $1,612 (€1,500) as an adjustment for inflation. Tesla pays lower wages than other major carmakers in Germany, which has resulted in a pushback from IG Metall—the country’s biggest labor union.