Musk’s plan to make electric cars affordable now seems to be on track.
During a site visit, Tesla CEO(chief executive officer) Elon Musk has outlined plans to manufacture a car valued at 25,000 euros at Tesla’s factory near Berlin. The timeline for the start of production has not been specified. Tesla saw its shares rise by 3% in the U.S. pre-market trading.
This move is seen as Tesla’s bid for mass adoption of its electric vehicles (EVs), countering the high prices and interest rates that have been a barrier in Europe and the U.S. The average price of an EV in Europe during the first half of 2023 exceeded 65,000 euros, contrasted with China’s average of just over 31,000 euros.
Additionally, during his visit to the Gruenheide plant, Musk thanked employees for their dedication and disclosed the plan to build the budget-friendly car there. This German facility currently produces the Model Y, Europe’s top EV in sales.
Plans are also underway to expand the plant’s output to 1 million vehicles annually, although Tesla has not updated its production figures at the site since announcing a production rate of 5,000 vehicles per week in March. The expansion is subject to approval from local authorities, who are assessing the environmental compliance of Tesla’s plans.
Despite postponing plans for a more cost-effective EV in 2022 due to technological hurdles, Tesla has been reportedly nearing a production innovation that could substantially expedite manufacturing and cut costs.
Tesla’s goal to deliver 20 million vehicles by 2030 heavily relies on tapping into the mass market, distinguishing its strategy from that of competitors like Volkswagen, who are prioritizing profit margins over delivery targets during the EV transition.
In terms of employee benefits, Tesla has announced a 4% wage increase for all staff starting in November, with production workers receiving an additional annual bonus of 2,500 euros from February 2024.
This increase translates to an 18% raise over the next 1-1/2 years, contrasting with the German union IG Metall’s report that Tesla’s wages were around 20% lower than other car manufacturers under collective bargaining agreements in 2022.