Tesla buries Model 2, the $25,000 affordable electric car project

It was an open secret, but Elon Musk has officially confirmed that he is giving up on the project. affordable $25,000 electric vehicle which should have been in production for several years to focus Tesla's efforts on a more economical version of the Model Y, its flagship SUV that shares the platform and mechanics with the Model 3.

The South African-born entrepreneur announced the simpler, cheaper and more accessible version of the Model Y during the presentation of financial results of the brand during the first half of the year just a few days ago. And Musk believes that the key to turning around Tesla's poor commercial results is the low purchasing power of its potential buyers, since, as he stated, "people want to buy a Tesla and can't; there's not a lack of desire to buy electric cars, there's a lack of financial capacity." At this point, it's worth remembering that Tesla sales have fallen by 50% in Europe and 15% in the United States in the first six months of the year, and that the state of California—Tesla's main automotive stronghold until now—has accumulated seven consecutive quarters of declining sales.

Tesla hasn't confirmed how it plans to reduce production costs for the Model Y to offer a more basic and affordable version, although some sources point to lower-capacity batteries and the use of simpler, more affordable fabric seats than the current ones.

Farewell at Model 2

The announcement of the most affordable version of the Model Y, a car that until now had been the mainstay of Tesla's commercial growth, is the catalyst Musk has prepared to overcome the crisis of confidence and the decline in sales that his troubled political adventure in the Trump administration has brought. However, it is clear to everyone that this is a simple, practical, and more economical solution than creating a Model 2 with a new platform and development and production costs that the brand may not be able to amortize in an immediate financial plan. In this sense, Tesla's strategy responds to the need to continue controlling production costs and further optimize the (already fully amortized) platform used by the current Model 3 and Model Y.

The new budget version of the Model Y is expected to hit the market sometime next year, and Musk expects it to perform "especially well in Europe." However, it remains to be seen whether this budget version of the Model Y succeeds commercially and regains interest in the brand, although some automotive analysts point out that Musk's approach does not solve one of the brand's main problems: an aging range that is technologically and aesthetically surpassed by major European and, in particular, Chinese manufacturers.