The Upcoming Tesla Model 2 Is Destined To Become The Next King Of Budget EVs

Update 6 April 2024- Reuters recently reported that Tesla has canceled Model 2. A claim Elon Musk denied on X by posting "Reuters is lying (again)."
The yet-unnamed upcoming Tesla’s “Project Redwood” is destined to become one of the greatest feats in the automotive industry and might become a bestseller in underpenetrated EV markets like the US and Southeast Asia due to its low price, decent range, and game-changing production processes. Although there are plenty of speculations regarding the Tesla Model 2, most are just wishful thinking. Here are the features that you can expect in the most affordable Tesla car ever as confirmed by Tesla or Elon Musk.

What Will The Most Affordable Tesla Look Like?

SUV in all shapes and sizes seems to be the raging trend and has become a bestseller for many automakers like Bentley, BMW, Kia, and Hyundai. The latter two have cemented themselves as a force to be reckoned with within the budget EV segment with their respective offerings like EV6 and Ioniq 5. 

Earlier this year Reuters exclusively reported that during its annual earnings call, Elon Musk said Tesla will start producing its next-generation EV by H2 2025. Sources familiar with the matter described the car as a compact SUV. The exterior and interior will likely focus heavily on utility and might very well look like the baby Model Y without the scissor doors just like in the exclusive renders above.

Will It Really Cost $25,000?

Although the media has started referring to “Project Redwood” as a $25,000 car, the figure seems a bit too low even for one of the most efficient mass-market EV makers ever for two reasons. First, Self-driving capabilities have been one the major reasons why people prefer Tesla more than any other EV, and the technology required to make autonomous driving possible costs big money. 

Parts like LiDAR, Ultrasonic Sensors, and Radars are expensive especially nowadays as the industry still deals with semiconductor shortages. This also was a decisive factor when ultrasonic sensors for Tesla vehicles were ditched in favor of camera-based “Tesla Vision”, which can execute complicated tasks like Autopark, Tap to park, and Smart Summon. Providing all these as standard in a $25,000 car seems a bit far-fetched. Although as an option it could work that could likely cost between $6,000-$12,000, as seen on the currently most affordable, Tesla Model 3 configurator.

Second is the battery, which is the single most expensive component to manufacture and bears the bulk of an EV price. Currently, the partnership between CATL and Tesla is being seen as a match made in heaven. The former has established itself as the largest automotive battery supplier in the world and is the only one to have the tools and technologies necessary to make Elon Musk’s vision of making one of the most affordable and dependable EVs of all time. 

Tesla Model 2 Will Be Made In Gigafactory Austin

CATL being a Chinese company has proven to be an insurmountable hurdle for Tesla as the US has been levying all kinds of sanctions against East to boost self-reliance on things like chips, semiconductors, and most importantly EV batteries. Hence, the $7,500 EV rebate which you can get in full if the EV you have purchased has a battery assembled in the USA and it has domestically sourced critical minerals. The only solution seems to be CATL licensing their battery tech to US companies in exchange for royalties or the Gigafactory Austin. 

Gigafactory Austin Will Be The Ground Zero For “Project Redwood” AKA Tesla Model 2. The factory in Austin will employ  “Gigacasting’ and the  “Unboxed” production technique in which large sub-assemblies of the car will be produced simultaneously and then later assembled. The process can reduce manufacturing footprint by 40 percent and vehicle cost by 30 percent, effectively bringing vehicle cost to near its anticipated $25,000 price point. Later, Tesla plans to assemble Model 2 in various locations around the globe like Berlin, Shanghai, and possibly India where its site inspectors are scheduled to visit in April 2024.

What Features Will Tesla Model 2 Have?

The Cybertruck got rid of the status quo by implementing forward-thinking and uber-cool features like steer-by-wire, 48V architecture, and steel exoskeleton. Tesla’s Model 2 is expected to follow the same industry-disrupting approach.

In a document published by Tesla dubbed “Master Plan Part 3”, the upcoming “Project Redwood will have a 53 kWh battery pack and is likely to provide 250 miles of range along with fast charging. The document also suggests that Tesla will produce around 42 million units of its next-generation electric vehicle annually.

In March 2023 Tesla confirmed that the motor used in the Tesla Model 2 will not feature any rare earth materials and will be more powerful while costing about $1,000. The design will use 75 percent less silicon carbide and will be compatible with various battery chemistries like Lion, LFP, and NMH. Expect the Tesla Model 2 to be available in various battery capacities with a choice of either RWD or AWD and as per Tesla's standards, a super-selective choice of colors and cabin materials to keep things simple and affordable.