A source with knowledge of the situation stated on Monday that Tesla intends to construct a 25,000-euro ($26,838) car at its facility near Berlin. This is a long-awaited breakthrough for the electric vehicle maker, which is hoping for widespread adoption of its automobiles.
The source, who wished to remain anonymous, did not specify when work would start.
Tesla opted not to respond. At 09:10 GMT, its shares were up 3% in pre-market trade in the US.
According to customer polls, the expensive cost of electric automobiles, when combined with high financing rates, is one of the issues impeding the adoption of this technology in Europe and the US.
Auto research firm JATO Dynamics reports that in the first half of 2023, the average retail price of an electric vehicle (EV) in Europe was more than 65,000 euros, while in China it was a little over 31,000 euros.
Musk had long-term plans to produce an electric vehicle at a lower cost, but he shelved the project in 2022 after declaring he was still learning the technology.
Nonetheless, in September, sources told Reuters that the automaker was getting close to a breakthrough that would enable it to die-cast almost the entire EV’s underbody in a single piece, which would speed up manufacturing and cut costs.
To differentiate itself from competitors like Volkswagen (VOWG_p.DE), which have resorted to protecting profit margins in the shift to electric vehicles rather than setting delivery targets, Tesla must expand into the mass market in order to achieve its goal of increasing vehicle deliveries to 20 million by 2030.
A video posted on Elon Musk’s social media platform X on Friday, the company’s chief executive commended the workers for their hard work during a visit to the Gruenheide plant.
According to the source, he told employees during the same meeting that the 25,000-euro car would be built there.
Presently, Europe’s best-selling EV, the Model Y, is produced at the German plant.
The automaker announced in March that it had manufactured 5,000 cars a week, or around 250,000 a year, but it has not disclosed how many cars it makes at the German factory, which it intends to double to 1 million vehicles annually.
Without giving a date, local officials stated in October that they had requested additional information from the automaker regarding how its expansion plans would comply with laws protecting the environment before deciding whether or not to accept them.
Additionally, Tesla told employees on Friday that starting in November, all employees would receive a 4% wage increase. Additionally, starting in February 2024, production workers would receive an additional 2,500 euros annually, or an 18% pay increase in one and a half years.
In 2022, the German organization IG Metall said that Tesla’s wages were about 20% less than what other automakers’ collective bargaining agreements promised.