Tesla started affordable model production, launch in Q4

Tesla has started an affordable electric vehicle (EV) model production, and it will be available in the fourth quarter, the company shared this update on Wednesday.

Lars Moravy, VP of Vehicle Engineering, said the model production started in June and the team is preparing to expand the output numbers. He further revealed that production has started at Tesla factories in the US, but an expansion will go through its other facilities in the third quarter.

Lars emphasised that the focus is on distributing the current models and avoiding complexity. He eventually described that affordable models will roll out for every customer in the fourth quarter.

Elon Musk, CEO of Tesla said that the company is focusing on utilizing the existing production line at the Gaga Taxas and Fremont to produce these affordable vehicles instead of setting new lines from scratch.

“The goal with those products was not to negatively impact revenue or gross margin, but just to make a care that everyone loves and wants at a more affordable price,” Lars concluded.

Launching an affordable car model is a high requirement for the company as it continues to face blazing competition in China, one of its biggest car markets. On the other hand, the recent challenges posed by the removal of EV tax credit require a solution that could offset the affordability concerns, which is likely to rise after the tax credit lapses in September.

Earlier this year, Tesla launched a new Model Y across the globe with a new design and a bunch of other upgrades. This EV is well received by customers, and Lars’ statement confirmed that the current models will be pushed at full capacity to sell as much as units as possible in Q3 with those government incentives. Launching a new model during this time won’t help to exhaust the current production of the existing vehicles.

This maybe the main reason that Tesla may have started production but pushed the affordable model launch to the Q4 rather than the previous announced H1 2025.