Let’s face it, Tesla’s current model lineup is so old, “it has whiskers.” The Model S was introduced 14 years ago, and the Model 3 turns seven in 2024. Combine that with the current narrative that the EV movement is stalled, and Tesla as well as the rest of the auto industry is adapting to a new era. Elon’s brainchild is still the leader in EV market share at the beginning of 2024. However, analysts predict that by the end of the year, the collective legacy auto industry will outsell it for the first time. Is the Tesla Model 2 the answer?

What’s a Hip Car Company to Do?

Well, how about reinventing the automobile? Musk has always said he was fascinated by “the machines that make the machines,” so he and his team of merry EV gurus came up with a new manufacturing schematic dubbed the “Unboxed Process.” Listen to Tesla’s Franz von Holzhausen and Lars Moravy detail the new technology.

In a nutshell, it reduces the number of parts into fewer components and assembles them in a completely different order than what is commonplace today. The company claims it reduces the factory footprint and requires fewer workers and hours to build the car. This is all fascinating but the jury is still out on the non-repairability of huge giga cast sub-assemblies. And how long it will take to get this brand-new production system up to snuff quality-wise.

$25,000 Entry-Level Tesla Model 2 To Plug Gap In Tesla’s Current Lineup

Tesla badly needs an affordable vehicle to grow its lofty expansion goals. The company has dominated the luxury and mid-level luxury EV markets, but it is AWOL in the lower-end market. The Model 2 aims to plug that gap, spurring sales along the way. Although details about the baby Tesla are somewhat murky, the buzz on the street is the Model 2 would have to debut with an MSRP of $25,000. And it would need a ceiling of no more than $30,000 to live up to its hype. As any new car buyer knows, automobiles have become incredibly expensive. This is due in part to safety, tech, and creature comforts that are mandatory today. Commensurately, the average new vehicle price in America hovers around $48,000.

Tesla Model 2: Where Will It Be Built And When Can We Buy It?

Production for the Model 2 will most likely start in Texas. A future factory in Mexico will probably be the second location. Tesla has said that it will announce other manufacturing centers outside of North America by the end of 2024. Rumor has it that Tesla Shanghai is in the running as well. We think from a political and green tax incentive standpoint, Tesla must prove it can build the Model 2 in North America.

Remember this is an all-new car and manufacturing process. Couple that with Tesla’s history of missed deadlines and it is anyone’s guess when the first car will roll off the assembly line. Elon Musk went a bit further saying the company is “very far along” on this next-generation Tesla. He noted that Tesla is currently planning to start its production in the second half of 2025. Other analysts hint that the Model 2 might appear well into 2026. This is because Tesla has its hands full with ramping up Cybertruck and Highland Model 3 production.

Tesla Model 3 Highland

We’re Not In The 2010s Anymore

Arguably, the holy grail of the electric car movement is the affordable EV and every auto company in the world is burning the midnight oil to reach this bogey. Chinese automakers are already offering even cheaper EVs than the Model 2. Tesla had the electric vehicle market all to itself ten years ago, but how will the Model 2 fare with some serious competition from not only Detroit, Asia, and Europe, but China as well?

Tesla has its loyal fanbase for sure, but other OEMs do too. We’re kind of tired of Tesla’s current line up and we think car buyers are bored as well. Tesla is aware of this, responding with the refreshed Model 3 and constant price reductions.

Who Will Win The $25K Affordable EV Race?

There is an irony to all this. For all the money Tesla has invested in a “better mousetrap,” GM quietly rolled out the $25K, 258-mile-range Chevy Bolt EV almost ten years ago without reinventing the wheel. Then it shot itself in the foot and canceled the car, only to resuscitate it for the 2025 model year. It was the worst gaffe in automotive history, essentially ceding the affordable EV race (at least in perception) to Tesla’s Model 2 and the Chinese.

Chevy Trailblazer might offer a preview of the new Ultium-based, Bolt 3.0 styling.

So, the battle in North America in 2025 will be between the Model 2 and the refreshed Ultium-flavored, Bolt 3.0 with LFP batteries. Never mind China for now, as unfettered access to the US market is politically charged and in limbo. Again, this is especially true when green incentives heavily favor North American-based companies, mineral sources, and factory locations.

Battle for Profitability

The race to a cheap EV will be a battle for profitability. In one corner will be GM, with its economies of scale, amortized Bolt tooling, and a huge, validated manufacturing footprint in place. In the other corner is Tesla with a lean, but untested manufacturing process that is unproven in the real world, at scale, with good reliability and crash scores. This isn’t to say GM is in the clear, they have been bedeviled by slow battery pack manufacturing ramp-up, software glitches, and the aforementioned terrible PR.

Tesla Model 2 render

Will They Notice, Or Care?

Finally, profit margins aside, will the end user care how the car is built if it is good-looking, quick, and trouble-free? A good example is the Ford Lightning. It’s a converted ICE vehicle that shines in its refinement and usability minus the clean sheet design. Elon and Company may have the last laugh, but remember, other OEMs have been dissecting the Unboxed Process and are not standing still. Buckle up folks, this will be a wild ride over the next 24 months.