Tesla Model 2 compact car coming

Tesla is on a crusade to reduce the price of its EVs and company CEO Elon Musk has confirmed an affordable, global, compact model electric is coming.

Although the Tesla Model 2 name has not been set in stone, Musk revealed that a compact car/SUV and a ‘higher capacity’ EV are under development during an investor call last week.

"Don’t think we can comment on our detailed product road map beyond what’s announced because I think we want to reserve that for product launches," he said. "But it would be reasonable to assume that we would make a compact vehicle of some kind and probably a higher capacity vehicle of some kind.

"These are likely things at some point. But I do think there’s a long way to go with [Model] 3 and Y and with Cybertruck and Semi. So it’s a long way to go with those. I think we’ll do the obvious things,” he said.

Musk also recently confirmed that a new, circa-$US1billion Tesla factory in Austin, Texas will build the Cybertruck pick-up, but said even that vehicle’s $US39,990 starting price is still too expensive.

The new Tesla Model 2 compact car will be the US EV brand’s most affordable vehicle yet, but it remains to be seen how the brand will approach its development.

Cheaper EVs usually deliver a lower cruising range, but given that Musk recently axed a budget-priced Tesla Model Y because of its “unacceptably low” range, it could be looking to drop a big battery into the compact car.

“It is important to make the car affordable. I think we will not succeed in our mission if we do not make cars affordable,” said Musk.

According to the Tesla website, the brand's most affordable electric car in Australia is the Model 3 sedan, which starts at about $80,000 (drive-away).

It’s not yet clear what price-point Tesla will target for the Model 2, but it will need to be under $50,000 in Australia to gain traction with buyers.

The most affordable electric car on sale in Australia today is the Hyundai IONIQ Electric ($48,970) but the MG ZS EV will be offered at a special price of $46,990 (drive-away) when it launches here soon.

Other mainstream EVs such as the Nissan LEAF ($49,990) and Hyundai Kona Electric ($60,740) are at least double the price of similarly-sized petrol-powered vehicles.

“Like the thing that bugs me the most about where we are right now is that our cars are not affordable enough. We need to fix that,” said the outspoken Tesla CEO, who wants to send humans to Mars by 2024 and has sold all his properties, preferring to rent his house with his kids and pop-star wife Grimes.

Apart from the upcoming Cybertruck ute, Semi truck and new-generation Roadster sports car, Tesla is also working on new versions of its bigger, more expensive (and older) Model S sedan and Model X SUV.

In the meantime, a new ‘Palladium’ update will be implemented in the near future and is expected to bring several significant enhancements to the vehicles, including improved efficiency and greater range.

Tesla vehicle production output levels