Tesla reveals plans for cheaper models, but no sign of Model 2

Groundbreaking electric vehicle maker tells investors it will slash the cost of production when it debuts its next generation of vehicles.

Tesla has outlined plans to introduce a family of budget-priced electric cars to be manufactured at a new factory in Mexico.

While the long-speculated circa-$40,000 Tesla – which many refer to as the Model 2 – didn’t break cover at a long anticipated investor day, Tesla outlined a plan to revolutionise its manufacturing process to reduce the cost of building EVs.

Tesla also confirmed it would spin a number of different models of a new vehicle platform, which is bad news for established car brands still playing catch up on EVs.

Tesla claims it will slash the cost of producing its cars with new technology. Picture: Thomas Wielecki

The next-generation platform will introduce new technology that halves production costs.

“As we improve affordability the number of people who have access to our products dramatically increases,” said Tesla CFO Zach Kirkhorn.

“It enables an exponential growth in our volume with linear reductions in the cost of our products.”

It’s part of Tesla’s plan to build 20 million vehicles annually – about twice as many as Toyota – by 2030.

The new vehicles will debut improvements in battery technology, software, motors and manufacturing.

Tesla will bring the design and manufacturing of the electrical architecture completely in-house and will switching vehicle ancillaries from 12 to 48 volts in the process.

That 48V electrical system – for lights, infotainment and ventilation systems – starts with the radical Cybertruck pick-up truck, which the company says will go into production late this year.

Tesla’s Cybertruck is due to enter production later this year. Picture: Supplied.

The company is also planning to redesign the production line so that a car flows down it faster and with less human interaction, in turn reducing costs.

“We have to rethink manufacturing again,” said Lars Moravy from the vehicle engineering department.

Tesla says its next generation drive units will be about US$1000 cheaper to manufacture and not use any expensive rare earth metals. The factory will require about half the space.

“Our track record proves we can deliver the best cars,” said design chief Franz von Holzhausen.

“I’d love to really show you what I mean and unveil the next-gen car, but you going to have to trust me on that until a later date.

Tesla didn’t unveil any new cars at its recent investor meeting. Picture: Thomas Wielecki.

“We will always be delivering exciting, compelling and desirable vehicles – as we always have.”

Tesla says it expects to invest up to US$175 billion – more than five times the expenditure over its near-20-year history – to achieve its goal.

One of the first big investments will be the creation of a new Gigafactory in Mexico.

“The next Tesla Gigafactory will be in Mexico near Monterey,” said co-founder Elon Musk, who added that “we will continue to expand production at all of our existing factories.”

“Giga Mexico would be supplemental to the other factories.”