Tesla to build €25,000 car at Berlin factory

Chief executive Elon Musk announced plans during a visit to the factory last week

The German plant currently produces the Model Y, Europe's best-selling EV. Picture: Future Image

Tesla plans to build a €25,000 car at its factory near Berlin in a long-awaited development for the electric vehicle maker aiming for mass uptake of its cars.

A source with knowledge of the matter, who declined to be named, did not say when production would begin. Tesla declined to comment. 

The steep price tag of electric cars — compounded by high interest rates — is one of several factors holding back the uptake of the technology in Europe and the United States, consumer surveys show.

The average retail price of an EV in Europe in the first half of 2023 was over €65,000, according to autos research firm Jato Dynamics, compared to just over €31,000 in China.

Chief executive Elon Musk had long planned to make a more affordable electric car but said in 2022 he had not yet mastered the technology and shelved the plan.

Still, sources told Reuters in September the carmaker was closing in on an innovation that would allow it to die cast nearly all of the underbody of the EV in one piece, a breakthrough that would speed up production and lower costs.

Mass market

Expanding into the mass market is critical to meeting Tesla's aim of increasing vehicle deliveries to 20 million by 2030, setting it apart from competitors like Volkswagen, which have shied away from setting delivery targets and instead focused their strategies on protecting profit margins in the transition to EVs.

Musk visited the plant in Gruenheide on Friday and thanked staff for their hard work, a video showed on Musk's social media platform X.

At the same meeting, he informed staff of plans to build the €25,000 vehicle there, the source said.

The German plant currently produces the Model Y, Europe's best-selling EV.

The carmaker plans to double the German plant's capacity to one million vehicles a year but has not provided an update on how many cars it produces there since March, when it said it had produced 5,000 vehicles in a week — equivalent to about 250,000 annually.

Local authorities said in October they had asked the carmaker to submit further information on how its expansion plans would adhere to nature conservation laws and would then make a decision on whether to approve them, without providing a timeframe.

Tesla also informed workers on Friday that all staff would receive a 4% pay rise from November onwards, with production workers receiving an additional €2,500 per year.

• Reuters