Would Tesla make the worst mistake in its history with affordable Model Y and Model 3?

Tesla seems to be taking a risky gamble with its new product strategy, which involves offering a little less for a little less money.

While expectations were high that Tesla would fulfill its revolutionary promise of a low-cost electric robotaxi vehicle, recent developments suggest a very different direction. During the latest quarterly meeting, Tesla executives revealed that the low-cost models would actually only be simplified versions of the current Model 3 and Model Y.

Lars Moravy, Vice President of Engineering, stated that these new models would resemble “in shape and design” the vehicles already produced. These comments sharply contrast with expectations of a completely new and innovative model. According to shared information, these cars will be built on the same assembly lines as the Model 3 and Y, which have been adapted to reduce costs.

You Would Have to Be Crazy to Spend More!

The hope for a vehicle under €30,000 based on a new platform, like that of the Robotaxi or Cybercab, appears to be fading. According to some sources, Elon Musk himself reportedly canceled this initial project. Instead, Tesla is shifting toward a cost-saving strategy: removing certain features while retaining the essentials.

A notable example of this approach has already been observed in Mexico. A stripped-down version of the Model 3, introduced last year, lacked a rear screen, offered ambient lighting limited to a single color, had non-heated fabric seats, and a basic steering wheel. This version was priced €4,000 less than the standard model. If this logic is applied elsewhere in the world, a simplified Model 3 could cost less than €30,000, subject, of course, to applicable import taxes…

However, this choice raises fundamental questions. Why continue paying more for higher-performance, minimally differentiated versions? By making its most affordable models almost identical to higher-end ranges, Tesla risks cannibalizing its sales of more expensive versions, which generate high margins. This strategy could weaken its profitability and its capacity to fund more ambitious future projects.

The goal is thus to offer cars “as capable” as existing models but at a more affordable price. Yet, this pragmatic approach could disappoint investors and enthusiasts, who were expecting bolder advancements. Forgetting what made the brand successful, namely innovation, could dilute interest in Tesla.

As Tesla prepares to launch these new versions in June, the question remains: will consumers be willing to follow? Internally, the high-end versions may suffer against intense competition, and in the market, the anticipated revolutions are giving way to simple evolution. A bold gamble that could prove costly.

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