USD 25,000 Tesla Model 2 “progressing,” imagined in 6 designs [Update]

On June 11, 2021, Tesla launched the Model S Plaid as the quickest (0-60 mph) series-production car and made a bold statement in the auto industry. Over the next few years, it wants to push the limits at the low end of the lineup, not in the aspect of acceleration and performance, but affordability. To truly democratize electric cars, it is developing an EV with a USD 25,000 (approx. EUR 21,000) price tag, that’s unofficially called the Tesla Model 2.

Tesla Model 2 project progressing, hints Elon Musk

“We’re continuing work — development work on the Semi, Cybertruck, the Roadster and other products,” Elon Musk, co-founder and CEO, Tesla, told analysts during the Q1 2021 earnings conference call. These “other models” include the officially announced but yet-to-be-named USD 25,000 Tesla.

Tesla confirmed the Model 2, the name the internet has warmly given the upcoming Tesla compact car, at its 2020 Annual Shareholder Meeting and Battery Day. The affordable Tesla car is expected to emerge at the end of 2023, and here are some interesting design inspirations for the model.

Role of the Chinese R&D center

From initial designing to final testing, the creation of the USD 25,000 Tesla is likely to have a major influence from the Tesla Lingang Gigafactory, where Tesla is building is its first R&D center outside the United States. In an interview with Xinhua Net this year (via YouTube/T-Study) Tesla China President Tom Zhu confirmed that the company will be able to design, engineer, develop, and test models at this overseas facility. The new R&D center will likely be up and running this year.

Zhu said that Tesla has shared the ultimate goal of the Tesla China R&D center on many public occasions, indicating that the USD 25,000 will be the star project of the new facility. He suggested that the new entry-level model will indeed be a global Tesla, not a China-exclusive car.

The ultimate goal has been mentioned in many occasions. In the future, we want to design, develop, and produce an original model in China. It is manufactured here and sold to the world. This R&D center is the starting point of the goal. We have mentioned before that we hope the vehicle built in China can have 100% local components.

Tom Zhu, President, Tesla (China)

The Tesla Model 2 pictured above comes from Instagram user Sugarchow (Instagram handle: sugardesign_1). Like most speculations, it shows the USD 25000 Tesla car as a compact hatchback to challenge the VW ID.3 and Nissan Leaf. European customers could be the main target for Tesla’s VW ID.3 challenger, but China shows the biggest potential for a cheaper Tesla in the current scenario.

Crossover Tesla Model 2

Tesla Model 2 render Shanghai
Tesla invited designers in China to submit portfolios on social media in January last year. Image source: Tesla

The design sketch above was posted by Tesla on Chinese social media following the Made-in-China Tesla Model 3 launch ceremony in January last year. During the event, Tesla CEO Elon Musk also stated that the company wanted to create a design and engineering center in China to design an original car for worldwide consumption.

Following the message, Tesla invited designers in China to submit portfolios. The company was on a hiring spree in China for the Gigafactory soon after. The first batch of Tesla Model 2 prototypes is expected to start testing this year, a Sina Auto report had suggested at the beginning of the year.

Tesla Model 2 as a supermini

Tesla Model 2 SUV design render
Tesla news sites ask the important question: Will the Model 2 have a crossover-SUV design? Image via Twitter

Autonomous driving

Regardless, we know for sure about the Tesla Model 2 because even at its affordable price point, it will offer the full self-driving pack (Tesla Autopilot), bringing autonomous features to a wide audience. Musk confirmed this last year at the Battery Day event, where he stated the company was confident in making a fully autonomous $25,000 Tesla model in three years.


While the Tesla news sites on the internet speculate the Model 2 as a sedan or crossover-SUV bodystyle, manufacturing could take place at both Tesla Gigafactory Shanghai and Tesla Gigafactory Berlin. Last year, a Chinese Environmental Impact Assessment document talked about expanding production capacity at the Shanghai facility for “the production capacity of Model 3, Model Y, and related derivative models.”

Tesla Model 2 as a city runabout

Tesla Robotaxi render
The Tesla Robotaxi could be based on the Model 2, but luxury/convenience features would be filtered for the commercial application. Image: André Domingues via Coroflot

Tesla Model 2 battery

Coming to its battery, the Tesla Model 2 is expected with the new Iron-based battery, which promises long cycle life. Further, the shift from Nickel to Iron for its entry-level future cars indicates Tesla is keen on lowering the cost of the car. An Iron base (which is more abundant than Nickel) would mean that Tesla would have fewer supply constraints. However, Musk indicated he had urged mining companies to produce more of the material.

With its long cycle life, the Tesla LFP battery (Lithium Iron Phosphate) would be an integral part of the Tesla Robotaxi. Long cycle life is paramount for commercial applications. The Robotaxi could be a derivative of the Model 2 with some of the luxury/convenience features deleted. Since Tesla already introduced the Model 3 with an LFP battery, the company could gather essential insights into this chemistry for optimization in the mass-market Model 2 in 2023.

With the high level of quality Tesla aims to offer even in its most affordable car, meeting the target price of USD 25,000 is challenging. However, the company is determined to achieve that. The LFP chemistry will keep the battery cost low, but there’s more the company can do. About that, below is what Zachary Kirkhorn, CFO, Tesla, said during the Q1 2021 earnings conference call:

Obviously, building a car like a Model S is quite complex and has various moving parts. Model 3 and Model Y were steps of improvement in that. But when you look at some of the other advancements that we are including in the Model Y, factories into Austin and Berlin, we have reduced the body pound by as much as 60%. And the part costs money.

Zachary Kirkhorn, CFO, Tesla

Another way Kirkhorn suggested Tesla can keep the production cost of the USD 25,000 Tesla is by making high volumes, in four factories worldwide.

On the upcoming Tesla 4680 cell

The name 4680 comes from the dimensions of the cell, 80 mm in length and around 46 mm in diameter. “We get five times the energy with six times the power, and enable 16% range increase just (from the change in) form factor alone,” Andrew Baglino, Senior Vice President, Powertrain and Energy Engineering, Tesla, said at the Tesla Battery Day last year.

Tesla is experiencing hiccups with the 4680 cells, Musk suggested during the Q2 2021 earnings conference call. Prototype production or limited production isn’t challenging, but mass-producing them is proving difficult. “We have a challenge with basically what’s called calendaring, or basically squashing the cathode material to a particular height,” Musk said.

So it just goes through these rollers and gets squashed like pizza dough, basically, but very hard pizza dough. And it’s causing — it’s denting the calendar rolls. This is not something that happened when the calendar rolls were smaller, but it is happening when the calendar rolls were bigger. So it’s just like — we were like, OK, we weren’t expecting that.

Elon Musk, co-founder and CEO, Tesla(Q2 2021 earnings conference call)

Baglino revealedduring the Q2 2021 earnings conference call that Tesla has proved the mettle of 4680 cells, and so, it is mainly the production aspect that remains to be worked out.

We have successfully validated performance and the lifetime durability of the 4680 cells produced in Kato, and we’re continuing ongoing verification of that reliability. We’re actually accruing over one million equivalent miles on our cells that we produce every month.

Andrew Baglino, Senior Vice President, Powertrain and Energy Engineering, Tesla (Q2 2021 earnings conference call)

Towards the end of the conference call, Musk hinted that the company may not use the 4680-format for the battery cells of the Model 2 and could offer a different format. What this format is, we don’t know for sure, but the cost and weight advantages have to be equally good for Tesla to keep the price promise of USD 25,000. “At a scale production, we obviously want to be using 4680s and structural pack,” Musk said in the beginning. “From a physics standpoint, this is the best architecture, and from an economic standpoint, it is the lowest-cost way to go, so the lightest, lowest cost,” he added. Then towards the end of the conference call, he slipped in,:

I see us sort of like consolidating around a 4680 nickel-based structural pack for long-range vehicles. And then not necessarily a 4680-format, but some other format for iron-based cells.

Elon Musk, co-founder and CEO, Tesla(Q2 2021 earnings conference call)

Tesla Model 2 Range

There’s no word on the battery pack capacity of the Tesla Model 2. Tesla may use an LFP battery pack with around 45 kWh (total/gross) energy content that offers a range of around 250 miles, enough to make it a daily driver for urban conditions. In the Model 3, the company offers a CATL 55 kWh LFP battery pack that can deliver a range of 468 km or 291 miles (NEDC/China).

2023 Tesla Model 2 rear rendering
The USD 25,000 Tesla will give compact cars like the VW Golf and the Nissan Leaf a run for their money. European countries are likely to be its main market besides China. Render: Theottle/Instagram

The Renault 5, a potential rival to the Tesla Model 2, will deliver a range of 400 km or 249 miles in Europe’s WLTP test cycle when it launches in early 2024, Renault confirmed in July. It will cost 33% less than the Renault Zoe, which puts it around EUR 21,000. There are similar price and range expectations from other upcoming compact EVs in Europe. So, it’s clear that in addition to a base price of under EUR 25,000, the Tesla Model 2 must offer a range of at least 250 miles.

Most configurations could have a single motor powering the rear wheels, and an AWD performance variant may top the range competing with the Alpine R5 and perhaps the Cupra version of the Seat Urbano.

Model 2 as a C-Segment hatch

Tesla 25000 USD car render
A Tesla Model 3 with the LFP battery is now on sale in China. The company would use these learnings for the Model 2’s LFP. Image source: PSArtcar via ArtStation

Tesla Model 2 Release Date

In January 2021, Sina Auto reported that the internal environmental impact assessment process for the Tesla Model 2 has begun and that the unveiling could take place in the second half of the year at the Guangzhou Auto Show. However, it doesn’t look like a concept Model 2, let alone the final EV, would show up anytime before 2022. Moreover, Tesla doesn’t hold Motorshow debuts, and we doubt that its ways are changing anytime soon. For a launch like the Model 2 that promises to democratize electric cars, it will most certainly program a company event for the world premiere.

Tesla manufactures over 380,000 cars in 2021

Until the affordable Model 2 is ready, Tesla is increasing the standards set for itself in the current model range. The company recently refreshed the Model S, and could release a new Model X in the coming months. In Q2 2021, the company sold 1,890 units of the Model S and X combined and 199,360 units of the Model 3 and Model Y combined. In Q2 2021, the company sold 1,890 units of the Model S and X combined and 199,360 units of the Model 3 and Model Y combined. Total deliveries stood at 201,250 units, marking a 9% improvement over last year (184,800 units).

Tesla Model 2 FAQs

What is the Tesla Model 2 release date?

The Tesla Model 2 (name: TBA) is expected to launch in late 2023.

Which electric cars are considered as Tesla Model 2 rivals?

The Tesla Model 2 will challenge the VW ID.2, Renault 4, and the Nissan Leaf.

What is the estimated Tesla Model 2 price?

The Tesla Model 2 would start at USD 25,000.