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Tesla Model 2: what to expect from Tesla’s cheapest electric car


Tesla is widely tipped to announce a smaller and cheaper model than the $64K Model 3 in the coming weeks

Tesla could soon reveal a smaller and cheaper electric car for the masses, with the small passenger vehicle rumoured to be called the Model 2.

Set to be a rival for the likes of the Volkswagen ID3 and Cupra Born electric cars, Tesla’s cheapest electric vehicle could undercut those key competitors, costing as little as USD$25,000, or roughly AUD$38,000. 

Reports from Autocar have said that the Model 2 could ride on Tesla’s next Generation 3 platform that is likely to be discussed in more detail at the Investor’s Day. 

Tesla Model 3 white studio shot front 3/4
A Tesla smaller than the Model 3 could be announced soon

Tesla’s current range consists of four models, though only two are presently sold in Australia: the Model 3 sedan (from $64,300 before on-road costs), and the Model Y midsize SUV (from $69,300).

Tesla’s event is set to kick off on March 1 at the American automaker’s Texas Gigafactory where it is expected Elon Musk will deliver his third ‘Master Plan’. 

Is a $40,000 Tesla model possible in Australia?

Tesla master plan future cars
Tesla teased several concepts in a recent video

Tesla’s present base model, the Model 3 rear-wheel drive, costs about $67,000 driveaway in Australia, so achieving a far cheaper price for a hypothetical Model 2 is a tall order.

Rumours of a starting price of USD$25,000 (AUD$38,000) have raised doubt among analysts over whether this pricing is achievable

US analysts have predicted that it is more likely the future Model 2 will sit closer to the USD$30,000 price point ($45,000), however time will tell what price Tesla actually puts on its new EV. 

The Model 2 could compete with cars like the BYD Atto 3

Relevantly, several lower-cost EVs have recently entered the market around the latter price. The BYD Atto 3 starts at around $48,000 driveaway, while the MG ZS EV is priced from $46,709 driveaway.

Power and range expectations

If we look at one of the Model 2’s potential key rivals, the Volkswagen ID3, it’s likely that Tesla’s cheapest electric car could use a battery size that is around 50-60kWh. A smaller, cheaper battery pack will help Tesla cut costs.

Volkswagen ID3 First edition rear 3/4 shot
Tesla could price its Model 2 below the Volkswagen ID3

The ID3 has a 58kWh battery and a range of approximately 409km (WLTP), while the Cupra Born has a much larger 77kWh usable battery pack that allows for a 511km battery range (WLTP). The Born is priced from $59,990 before on-road costs though, so the Tesla could very much undercut Cupra’s new electric car by some margin. 

What about standard technologies and specifications?

Tesla Model Y 2023 touchscreen software
We could see the large central screen feature on the Model 2

It’s very early to predict what will be available with Tesla’s cheaper EV offering, however it’s expected that the large central touchscreen – an iconic part of Tesla cars – will be standard. 

More expensive self-drive systems may not be standard and instead could be offered as optional extras, much like how Tesla’s enhanced Autopilot suite ($5100) and “full self driving” extended capabilities ($10,100) are currently marketed as extra-cost items for the Model 3 and Model Y.

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