Entry-level Tesla Model 2 targets $35,000 start price

Tesla is pushing ahead with plans to introduce its highly-anticipated Tesla Model 2, with a new report suggesting the entry-level battery-electric compact car is being developed to cost just $US24,000 ($A35,000) when it’s launched in 2025.

Official timings have yet to be confirmed, but news agency Reuters has reported that Tesla Model 2 production is primed to move to an all-new factory in India that will be designed to keep costs as low as possible.

Originally, the 2025 Tesla Model 2 was expected to be built in Tesla’s forthcoming Mexican plant, but the strategic move to India will help the EV-maker avoid local taxes.

Importantly, Indian production should also improve accessibility for the Australian market.

It’s not yet known if Tesla’s new entry model, which could be renamed by the time it enters production, will be built at other plants such as the US brand’s Gigafactory in Berlin, Germany.

However, the anticipated high volumes should see the Model 2 produced in multiple factories.

Wherever it’s built, according to the latest reports the Model 2 will be priced around 25 per cent less than the current Model 3 sedan.

In the Australian market, where the most affordable Model 3 costs $57,400 plus on-road costs, the entry-level Model 2 could be priced at around $43,000 – notwithstanding Tesla’s often fluctuating pricing strategy in our market.

Earlier this year there were suggestions the Model 2 might have been placed on the backburner as the prospect of an entry-level EV made by Tesla was not mentioned during recent public calls between the car-maker and key investors.

Reuters didn’t give timings on when ground will be broken for the new factory in India, but high-level meetings between Tesla and India’s commerce minister, Piyush Goyal, suggest an announcement could be imminent.

It’s thought the move to India came about after Tesla CEO Elon Musk met Indian president Narendra Modi in the US in June to discuss the high tariff on imports.

If the Indian factory goes ahead, Tesla will have manufacturing hubs in Fremont (US), Austin (US), Shanghai (China) and Berlin (Germany), as well the proposed plant in Mexico.

Currently, the Shanghai plant is the largest facility, producing more than 40 per cent of all Teslas made annually – including the Model 3 and Model Y sold in Australia.

Tesla has already said its next-generation vehicle architecture will help it slash production costs by up to 50 per cent and that it will be used to underpin all its future models, including a fully autonomous robotaxi.

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