Quiver Quantitative - Tesla (NASDAQ:TSLA) is taking a significant step towards the mass uptake of electric vehicles with plans to produce a €25,000 car at its factory near Berlin, aiming to make its cars more accessible amid high costs in the European EV market. Although the timeline for production commencement wasn't specified, this move signals a strategic shift for Tesla as it seeks to expand its consumer base. The decision is timely, considering consumer surveys in Europe and the United States indicate that the high cost of electric vehicles, exacerbated by rising interest rates, is a major barrier to wider adoption. With the average retail price of an EV in Europe during the first half of 2023 exceeding €65,000, Tesla's planned offering would significantly undercut current market prices, potentially stimulating a surge in demand.
The ambition to introduce an affordable electric car has been on CEO Elon Musk's agenda for some time. Despite shelving the idea in 2022 due to technological challenges, recent reports suggest Tesla is nearing a production innovation that could drastically reduce costs and increase production efficiency. This development aligns with Tesla's goal of boosting vehicle deliveries to 20 million by 2030, a target that starkly contrasts with competitors like Volkswagen (ETR:VOWG_p), who prioritize profit margins over specific delivery goals.
During a recent visit to the Gruenheide plant, Musk commended the staff's efforts and shared plans for the new €25,000 vehicle's production. This plant, which currently produces the Model Y—Europe's best-selling EV—is slated for a capacity expansion to 1 million vehicles per year. While Tesla has not updated its production figures since announcing a 5,000 vehicles per week milestone in March, local authorities are reviewing the company's expansion proposals in light of nature conservation laws, pending further information from Tesla.
In addition to production plans, Tesla has also announced wage hikes for its German workforce, effective from November. Production staff will enjoy an additional €2,500 annually from February 2024, amounting to an 18% pay increase over 1.5 years. This raise addresses previous concerns from the German union IG Metall about Tesla's wages being approximately 20% lower than those offered by other automakers under collective bargaining agreements.
This article was originally published on Quiver Quantitative