Tesla, the electric vehicle (EV) manufacturer, is reportedly planning to produce an EV priced at 25,000 euros (USD 26,838) at its factory near Berlin, according to sources. Although the source did not specify the production start date, this development has been eagerly awaited and signals Tesla’s commitment to making electric vehicles more accessible to the mass market.
Elon Musk’s visit to Berlin
Elon Musk, Tesla’s Chief Executive, visited the Gruenheide plant on a recent Friday, where he expressed his gratitude to the hardworking staff. During the same visit, he disclosed the plan to build the 25,000-euro vehicle at the German plant.
Berlin factory’s current role
The Berlin factory is currently responsible for manufacturing the Model Y, which has become Europe’s best-selling electric vehicle.
Affordable EV ambitions
Elon Musk had long envisioned a more affordable electric car. However, in 2022, he stated that Tesla had not yet mastered the necessary technology and temporarily shelved the idea. Nevertheless, sources revealed in September that Tesla was making significant progress in developing an innovative process that would enable the die-casting of nearly the entire underbody of the electric vehicle in a single piece. This breakthrough would not only accelerate production but also reduce costs.
Tesla’s vision of the mass market
Expanding into the mass market is a key component of Tesla’s goal to increase vehicle deliveries to 20 million by 2030, representing a tenfold increase from its current production capacity. However, the electric vehicle market has recently faced challenges due to a weak economy and high interest rates, leading Tesla and other manufacturers to reduce prices in an effort to stimulate sales.
Doubling Berlin’s production capacity
Tesla’s plan also involves doubling the capacity of the German plant to produce 1 million vehicles annually. While Tesla had reported producing 5,000 vehicles per week in March, equivalent to approximately 250,000 annually, the company has not provided updated production figures since then.
Regulatory hurdles and concerns
Local authorities raised concerns in October and requested further information from the automaker regarding its expansion plans and their compliance with nature conservation laws. A decision on the approval of these plans is pending.
Pay increase for Tesla employees
In addition to the production expansion, Tesla also conveyed the news to its workforce that all employees would receive a 4% pay increase starting in November. Production workers will receive an additional 2,500 euros per year beginning in February 2024, translating to an 18% pay increase over one and a half years.
Challenges faced by German union
This move comes after German union IG Metall reported in 2022 that Tesla’s wages were approximately 20% lower than those offered under collective bargaining agreements at other automobile manufacturers.