In this blog post, we'll begin by sharing everything we know about the Tesla Model 2 and how it's made. After that, we'll talk about whether it's a good idea to wait for the Tesla Model 2, and also explore other affordable Tesla choices currently available. We also discuss what we know about the cancellation of the Tesla Model 2 - find out more below.

Tesla Model 2 Salary Sacrifice — **What we know about the Tesla Model 2**

This image is sourced from https://screenrant.com/tesla-model-2-details-explained/

Tesla's affordable hatchback model previewed
Innovative production method for cost reduction
Exclusive images unveiled
Introducing a revolutionary table battery design
Lightweight materials used for construction
Potential for a range of up to 180 miles
The promise of full self-driving capabilities
The starting price is estimated at approximately £18,000
Not named the Model 2

The new, cheaper Tesla model was due to hit the roads in 2024 to compete with cars like the MG 4 and the upcoming Volkswagen ID.2. We got a glimpse of the technology that will power this car at an investor event in March, and they've shown us a sneak peek of its design at a recent shareholder meeting.

The Model 2 won’t be called the Model 2?!

The name of the new, more affordable Tesla isn't clear yet, but Elon Musk has previously mentioned that it will be much cheaper to make than the Model 3 and Model Y. This is because of new manufacturing techniques and electrical components.

About its name, Tesla had not officially named their $25,000 car project. However, some people started calling it the "Model 2" as part of a playful naming scheme, "S3XY," for Tesla vehicles. Elon Musk himself doesn't use the name "Model 2" and explained that they originally wanted to call the Model 3 the "Model E," but they couldn't because Ford objected. So, they used "Model 3" instead.

*Image credit: Carwow Tesla Model 2 article*

In essence, the potential $25,000 Tesla was not going to be called "Model 2". Tesla doesn't have an official name for it yet, but they want to avoid legal issues as they had with Ford. Some people have called it the "Model Q," but that's not official. Others refer to it as the "Baby Tesla" because it's expected to be the smallest Tesla.

Even though the project doesn't have a confirmed name, throughout this blog, we refer to it as "Model 2" for consistency with common media references.

As of 2022, the Model 2 project appeared to be on hold. Elon Musk mentioned they had a lot on their plate and weren't actively working on a $25,000 car. However, there were rumours that it might already be in development at the Tesla Shanghai Gigafactory in China. During Tesla's 2022 Q3 earnings call, Elon briefly mentioned a "smaller" platform that could be produced at a much lower cost. This could be a reference to the Model 2.

Has production of the Tesla Model 2 been cancelled?

Reports suggest that plans for the Model 2, branded as the entry-level Tesla have, allegedly, been cancelled. According to Reuters, this decision was announced in a meeting attended by Tesla employees, with one of them saying this meeting took place in late February. Reuters sources do not know the reasons behind the cancellation of Model 2. Messages from an unnamed Tesla programme manager to staffers allegedly said the following on March 1st:

“I’d like to thank everyone for all your hard work and dedication to pushing boundaries and executing the best design possible given the aggressive constraints we had to work within,” the message said.

“We would not want all our hard work to go to waste, so it’s important that we tie things off and document things properly.”

Tesla faces competition globally, especially from Chinese electric vehicle makers targeting the market with low-priced electric cars. Manufacturers like BYD sold more than three million EVs throughout 2023. BYD registered more pure electric vehicles than Tesla in the last quarter of 2023 for the first time.

So, what is due to come instead of the Model 2? The company is said to shift its resources towards its driverless Robotaxi project, which has been promised since 2019.

The $25,000 Tesla: Tesla Model 2 price, specs, and battery range

This image has been sourced from https://www.linkedin.com/pulse/revolutionizing-ev-market-tesla-model-2-insight-quantum-aneuc

Elon Musk did confirm that the new Tesla hatchback could cost around £22,000 in the UK, which is significantly less than half the price of the Model 3 Standard Range Rear-wheel-drive, priced at £48,490 and offering a range of 305 miles.

Another factor that could have influenced the final cost of the Model 2 is whether Tesla can implement full-body casting for the new platform, which would reduce the number of parts needed for the car's body and shorten production time. There are unverified reports that Tesla has ordered the necessary equipment for this at the Shanghai Gigafactory.

Specifications for the Tesla Model 2, including its body type, features, and battery range.

tesla model 2 hatchback teaser the electric car scheme — This image is sourced from https://www.pinterest.co.uk/pin/kia-teases-silhouette-of-upcoming-gt-sport-sedan--27654985203158043/

Given its budget-friendly approach and the body style commonly seen in affordable EVs, the Model 2 was likely to be a scaled-down version of the Model 3 or Model Y. Potential body styles include a small hatchback sedan or compact car with fewer interior features and options compared to the Model 3 or Model Y. As an economical Tesla hatchback, the Model 2 would have competed with upcoming electric rivals like the Renault 4 or the VW ID.2.

The already minimalist interior design of Tesla vehicles was likely to be even simpler in the Model 2, with fewer luxurious extras like heated rear seats. Some believe that if the Model 2 project is related to the Tesla Robotaxi, the interior may not even include a steering wheel or pedals, although this is not confirmed.

When it comes to features, the Model 2 should come equipped with the necessary hardware for Full Self-Driving (FSD), with FSD available as a subscription for owners. FSD is a significant selling point for Tesla, so it's unlikely that the Model 2 would lack FSD capability, especially if it's intended for use as a Robotaxi.

The Tesla Model 2 is expected to offer a range of around 250 to 300 miles, based on Tesla's current standards and the potential competition. It's likely to use LFP (Lithium Iron Phosphate) batteries, similar to those found in many Model 3s. Some reports from China suggest that the Model 2 might use BYD's Blade batteries, a new technology designed to address concerns about battery fires and charging. Regardless of the battery type, the Model 2's minimum range should be at least 250 miles, with possible variations including a Model 2 Long Range and Model 2 Performance.

Given its budget-friendly price, the Model 2 is expected to strike a balance in its performance. While all Teslas have a sporty feel, the Model 2's acceleration from 0 to 60 mph is likely to be slower, around 5-7 seconds. It will still have that instant Tesla torque but with less of an exhilarating ride, and the suspension quality may be reduced to some extent.

Previous potential schedules for the Model 2

With the Tesla Cybertruck and Tesla Semi still in the pipeline, Tesla's production capacity is likely to be fully occupied throughout 2023. Unless there's concrete proof that the Model 2 is actively being developed in Shanghai, it's unlikely that the Model 2 will make an unexpected appearance before the end of 2023. If the Model 2 project does get scheduled for production in 2025, we were going to be anticipating pre-orders becoming available in early 2024.

However, according to the Reuters report referenced earlier, the Model 2 will not be available due to the cancellation of production.

The highly anticipated affordable Tesla was set to be manufactured in Berlin, utilising innovative construction techniques to lower costs.

tesla model 2 unboxed process — Musk visited Germany after a high-profile trip to the UK in November 2023, where he had a live-streamed conversation with Prime Minister Rishi Sunak about the future of artificial intelligence, attracting attention by suggesting that AI would eventually lead to job displacement.

This image is sourced from https://www.notateslaapp.com/news/1251/how-tesla-s-constant-improvements-are-making-its-vehicles-more-affordable

During his visit to Berlin, Musk focused on Tesla's future. He not only thanked the plant's employees for their work in increasing Model Y production but also reportedly confirmed that the smaller electric vehicle, often referred to as the 'Model 2,' would be the second Tesla model produced in Europe.

Expected to be priced at €25,000 (£21,670), the new Tesla will directly compete with Chinese-made affordable EVs like the MG 4 EV and BYD Dolphin, as well as upcoming entry-level models from European brands like the Renault 5 and Volkswagen ID 2.

This marks the second sign this year that Tesla is progressing with plans for an entry-level model. Earlier, Musk informed shareholders about the development of "two new products," with one likely being the updated Model 3, which is now available, and the other being the smaller, entirely new car.

Tesla has previously expressed its ambition to boost production at the Berlin factory to one million cars annually, up from an estimated 250,000 earlier this year. Musk mentioned that the updated Model 3 and the new model combined could produce more than five million units each year.

Tesla’s ‘unboxed' production process

During the company's Investor Day in early 2023, Tesla's leaders explained how they plan to significantly improve the efficiency of both their factories and vehicles with new production methods and technical innovations.

Tesla's engineering chief, Lars Moravy, acknowledged that the production of the Model 3 had faced significant challenges, leading to delays and issues. However, they've now developed new manufacturing techniques, initially explored during the development of the Cybertruck, that are expected to reduce factory size by 40%, cut costs by up to 50%, and substantially reduce the risk of delays at each stage of production.

The key principle is to minimise the work required at each production step. For instance, they'll directly attach seats to the underfloor battery pack, lifting the entire unit into a body shell painted in sections. This eliminates the need to remove and reinstall doors, reducing unnecessary movements and disassembly of the car or its components during production.

Overall, Tesla estimates that this new approach will lower the cost of constructing each vehicle by approximately £830.

Moravy pointed out that the established mass-production processes used today are rooted in the methods pioneered by Henry Ford over a century ago. Changing the car production process after so long is challenging.

Lars Moravy Electric Car Scheme Tesla — This image is sourced from https://teslanorth.com/2023/03/30/tesla-car-safety-features-video/

Details about Tesla's next car have mostly been kept secret. However, Lars Moravy confirmed that it won't be a Model Y that benefits from the production improvements showcased at the Investor Day. The design chief, Franz von Holzhausen, mentioned that details about the company's upcoming vehicle would be disclosed at a later date.

On a technological level, advances in battery and motor technology have led to a 75% reduction in silicon carbide. This means the next Tesla platform will be compatible with batteries of any chemistry. The powertrain chief, Colin Campbell, added that the next-generation Tesla electric motor won't use any rare earth metals in its construction.

Save 30-60% on the Tesla Model 2 with The Electric Car Scheme

If you're interested in leasing other Tesla Models, like the Model 3 or Y through The Electric Car Scheme in the UK, you can visit our quote tool (which also includes a variety of different EVs available).

You can also learn more about the Tesla Model 3 Highland by visiting our blog!