So, is there a new, more affordable Tesla in the pipeline? Apparently yes, and it’s not what you think. Last week, on a second-quarter Tesla earnings call, the man himself, Elon Musk let the cat out of the bag when he said, “It’s just a Model Y.”
Really? What does that mean? Could it mean that it’s just a stripped down Model Y? And what about the future of the federal tax credit?
Let’s face it: Tesla is the only American automaker capable of producing a high-end, realistic, appealing electric vehicle for less than $30,000. And if they have to bring the car back to bare bones to make it sell, then that’s what they’ll do, apparently.
People just don’t have enough money to buy Teslas now
Musk expanded by saying that, “The desire to buy our cars is very high. It’s just that people don’t have enough money in the bank to buy them. That’s the issue. So the more affordable we can make the car th
Then he revealed how potential buyers can possibly offset the purchase price of their car by “releasing their car to the fleet and have it earn money for them,” suggesting that people may ‘lend’ their cars back to Tesla in a type of robotaxi relationship perhaps. Musk then went out on a limb by saying he’s confident that “I think this will happen next year in the U.S. at least.”
What will happen when $7,500 tax credit ends?
His comments though raise more questions than provide answers. By saying “it’s just a Model Y,” does he mean a ‘new’ Y with upgraded parts but based on the old platform, which would help to keep costs down?
What we do know is that the more affordable Model Y, as referred to by Musk, should be surfacing in Q4 this year. But that will be long after the $7,500 federal tax credit ends—which will make it even tougher for Tesla to get the price down to the sub-$30,000 level that Musk seems to be alluring to.
Let’s have a quick look at Tesla’s current pricing. Today, the Model Y rear-wheel drive variant costs $44,990, which when you factor in the $7,500, drops the price to $37,490. But with that tax credit gone, and we expect it to disappear very soon under the Trump Administration, the price for a current model Y will hover around $44,000. So for Musk to achieve his goal of achieving a sub-$30,000, he will need to find $15,000 worth of savings in specs and features. The question is—which features to strip back? If it’s going to be used as some kind of robotaxi, then it will need all of its AutoPilot features. And given that the Y has been rated as one of the safest on the road by Euro NCAP, ANCAP and IIHS, Tesla would not want to skimp on safety features in any way—which would make it difficult to reduce pricing.
But Musk has pushed the boundaries of car tech in the past and redefined the genre, so we will give him some latitude and wait for further updates even if his car sales are hurting all over the planet.