Tesla's lower-priced vehicle is expected to be a smaller version of the Model Y
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Tesla is gearing up for a significant production expansion, focusing on their new low-priced models, with a planned annual production capacity of 4 million vehicles, according to Chinese media outlet 36 Krypton. The move is part of Tesla's broader goal of reaching annual sales of 20 million vehicles.
Industry insiders have revealed that this lower-priced model will be a compact version of the Model Y. Tesla is devising an ambitious production capacity plan, with the North American Gigafactory slated to produce 2 million vehicles, while the Berlin factory in Germany and the Lingang factory in Shanghai will each handle 1 million vehicles.
Budget Model Y to Drive Growth
The long-rumored low-priced Tesla model was first mentioned by CEO Elon Musk during the 2020 Battery Day. The model, sometimes referred to as "Model Q" or "Model 2," is expected to be a self-driving electric vehicle priced around $25,000. Tesla aims to halve production costs compared to the current Model 3 or Model Y, resulting in a more affordable starting price of approximately 150,000 yuan ($23,700).
Lower prices have proven effective in stimulating the market, as demonstrated by the significant sales increase following the Model 3 price drop earlier this year. A Tesla vehicle priced at 150,000 yuan could create another sales surge and help the company compete with major automakers like Volkswagen and Toyota.
Factories Worldwide Prepare for Production Boost
Tesla's plans have become more evident since this year's Investor Day, during which the company shared details about its Monterrey factory in Mexico. Covering an area of nearly 4,200 acres, the factory is significantly larger than the Texas and Shanghai facilities. In addition, the Berlin Gigafactory is seeking permission to double its annual production capacity from 500,000 to 1 million vehicles.
The Monterrey factory in Mexico will play a crucial role in realizing Tesla's ambitious production plan. The factory will implement a "Lego" manufacturing method to reduce production costs for the Model Y by 50%. However, sources suggest that mass production of this affordable model is still at least a year away.
Industry insiders believe that Tesla's efforts to lower the price of smart electric vehicles will not only allow the company to gain a larger market share but also contribute to the maturity of the industrial chain. This move is expected to bring significant changes to the smart electric vehicle industry as Tesla accelerates its plans surrounding low-priced models in pursuit of its 2030 sales goals.
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For the first time in quite a while, Tesla has increased the price of one of its vehicle offerings. The Model S Long Range and the Model S Plaid have both received a hefty price increase. However, not all is bad - as Tesla also added a new benefit for buyers.
Price Increase
The price increase for the Model S is $5,000 - currently only in the United States. This price increase will likely impact other markets, including Canada, in the coming days.
The Model S Long Range now starts at $79,990, while the Model S Plaid now starts at $94,990. The Model S and Model X now have the same starting price. Interestingly, that’s also the same pricing point for the Cybertruck AWD and Cyberbeast Trimotor non-Foundation Series.
The vehicle configuration does not appear to have changed, so the new pricing is simply an increase rather than the addition or removal of features. Tesla previously cut the price of the Model S and Model X by 15% in 2023, so this could simply be an adjustment to ensure that the vehicle pricing stays in line with inflation and other factors.
Free Lifetime Supercharging
For those on the fence about ordering a Model S, Tesla has brought back Free Lifetime Supercharging when you order a new Model S on or after December 13, 2024. As always, Free Lifetime Supercharging is restricted to the buyer’s Tesla account and to that specific vehicle. It cannot be transferred to another vehicle or another owner after ownership transfer. It’s worth noting, that it also doesn’t exclude the owner from receiving Supercharger idle fees or congestion fees. There is currently no end date for this promotion.
There are currently no changes to the Model X, neither a price increase nor the addition of Lifetime Superchargering. However, when Tesla makes changes to one of their premium vehicles, it usually affects the other one as well. So be on the lookout for potential changes to the Model X offering in the coming days.
We’ve seen Tesla value Lifetime Supercharging at $5,000, so this falls in line with the price increase we’re seeing. It’s possible that Tesla will begin to bring back Lifetime Supercharging as a perk for buying into their more premium Model S and Model X cars, or this could be another temporary promotion to get buyers who are on the fence to go ahead and make their purchase while this promotion lasts.
Tesla recently showed off a demo of Optimus, its humanoid robot, walking around in moderately challenging terrain—not on a flat surface but on dirt and slopes. These things can be difficult for a humanoid robot, especially during the training cycle.
Most interestingly, Milan Kovac, VP of Engineering for Optimus, clarified what it takes to get Optimus to this stage. Let’s break down what he said.
Optimus is Blind
Optimus is getting seriously good at walking now - it can keep its balance over uneven ground - even while walking blind. Tesla is currently using just the sensors, all powered by a neural net running on the embedded computer.
Essentially, Tesla is building Optimus from the ground up, relying on as much additional data as possible while it trains vision. This is similar to how they train FSD on vehicles, using LiDAR rigs to validate the vision system’s accuracy. While Optimus doesn’t have LiDAR, it relies on all those other sensors on board, many of which will likely become simplified as vision takes over as the primary sensor.
Today, Optimus is walking blind, but it’s able to react almost instantly to changes in the terrain underneath it, even if it falls or slips.
What’s Next?
Next up, Tesla AI will be adding vision to Optimus - helping complete the neural net. Remember, Optimus runs on the same overall AI stack as FSD - in fact, Optimus uses an FSD computer and an offshoot of the FSD stack for vision-based tasks.
Milan mentions they’re planning on adding vision to help the robot plan ahead and improve its walking gait. While the zombie shuffle is iconic and a little bit amusing, getting humanoid robots to walk like humans is actually difficult.
There’s plenty more, too - including better responsiveness to velocity and direction commands and learning to fall and stand back up. Falling while protecting yourself to minimize damage is something natural to humans - but not exactly natural to something like a robot. Training it to do so is essential in keeping the robot, the environment around it, and the people it is interacting with safe.
We’re excited to see what’s coming with Optimus next because it is already getting started in some fashion in Tesla’s factories.
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