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The new $25,000 Tesla “Model 2” compact hatchback could be even more affordable when it hits the US.

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In Elon Musk’s master plan for Tesla it includes a list of the company’s main goals, which in part one was to create a low volume, expensive car, then use that money to create a medium volume car at a lower price, then use that money to create a more affordable, high volume car. He then went on to say their goal has always been to make a truly affordable electric vehicle and said they could probably make a fully autonomous $25,000 Tesla about 3 years from now which at the time would be referring to September 2023. This was confirmed just last month when there was an official government report from the Tesla Shanghai Gigafactory that showed Tesla is indeed planning to add a new cheaper model that will be designed and produced at the Shanghai facility as soon as 2022. Jumping into the potential timeline of the new Tesla Model 2, last week Tesla China’s president, Tom Zhu, confirmed in an interview with a Chinese media outlet that the upcoming $25,000 Tesla car will be designed with China in mind but sold globally. Obviously there is no confirmed timeline, but based on what we’ve heard from the official Tesla China division we do know they are for sure developing a new compact hatchback model that will cost around $25,000 US and will most likely be slightly smaller than the Model 3. If and when the new Tesla Model does make it to the US it can possibly have an even cheaper price tag of around $19,000 for some customers if the new EV tax credit bill gets passed. If we assume some year over year growth on Tesla’s US sales let’s be conservative and guesstimate that if the Green Act does get approved then Tesla may very well have the $7,000 tax credit for an entire calendar year to cover 400,000 vehicles sold in the US. Here’s where our optimistic hat comes into play: If the bill does get passed later this year and if the Tesla Model 2 timeline somehow matches the rumor and is ahead of schedule, then it could be possible to buy the upcoming $25,000 Tesla Model 2 in the US and get a $7,000 tax credit to bring the cost down to $19,200 after factoring in Tesla’s required documentation and delivery fee which is currently $1200. If it does happen that means you could get a new Tesla for under $20,000 and it would be a huge success and giant smack down to gasoline vehicles, especially when it’s competing with other similar compact hatchbacks like the Toyota Corolla hatchback which are around that same price range. Even if the $7,000 tax credit doesn’t get passed or it’s gone but the time the Model 2 comes to the US, the Model 2 will still fill a big gap in the compact hatchback market where the Toyota Yaris and Honda Fit have been discontinued. You’ll of course need to pay more for the extras like full self driving or another paint color, but at the end of the day the base Model 2 is still a Tesla at its core and will still have the unmatched drive train, battery efficiency, and the high safety standards that Tesla prioritizes in all their vehicles.

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