Tesla is set to manufacture a 25,000-euro ($26,838) electric vehicle (EV) at its facility near Berlin, according to a source familiar with the matter, reports Reuters. The timeline for the commencement of production remains undisclosed. Tesla’s stock saw a 3% rise in pre-market trading in the U.S. following the report, which was cited earlier on X.
The high cost of EVs, exacerbated by elevated interest rates, has been a significant barrier to their widespread adoption in Europe and the U.S., as indicated by consumer surveys. Data from JATO Dynamics, an automotive research firm, reveals that the average price of an EV in Europe during the first half of 2023 stood at over 65,000 euros, in stark contrast to just over 31,000 euros in China.
Elon Musk, Tesla’s CEO, had previously expressed intentions to produce a more budget-friendly EV. Nevertheless, insiders reported to Reuters in September about Tesla’s progress towards a manufacturing innovation that would significantly expedite production while reducing costs.
Tesla has said its news Giga Mexico factory would be built to produce the next-gen EV, that will come with a new more efficient manufacturing process. The company also stated that Giga Texas will also build the next gen car first, ahead of Giga Mexico, as stated in Musk’s biography by Walter Isaacson.
Achieving a broader market reach is pivotal for Tesla’s goal of delivering 20 million vehicles by 2030. This ambition distinguishes Tesla from rivals like Volkswagen, who have prioritized profit margins over delivery targets in their transition to EVs.
During a recent visit to the Gruenheide plant, Musk expressed gratitude to the workforce and shared the company’s plans to produce the affordable EV at the location. Currently, the German facility manufactures the Model Y, which holds the title of Europe’s top-selling EV. Although Tesla aims to amplify the plant’s production capacity to 1 million vehicles annually, the company has not updated its production figures since March.
In addition to the production news, Tesla announced a wage increment for its employees. Starting in November, all staff will benefit from a 4% salary hike. Furthermore, production workers will receive an extra 2,500 euros annually from February 2024, translating to an 18% wage increase over 18 months. It’s noteworthy that in 2022, the German union IG Metall highlighted that Tesla’s wages were approximately 20% lower than those of other automakers under collective bargaining agreements.
