model 3 wild

Elon Musk’s “secret master plan” for Tesla has always been to offer less expensive and higher volume vehicles – going down market with each new generation. At the moment, Tesla is undoubtedly a luxury carmaker with its less expensive model currently selling for $71,500.

The automaker’s third generation platform – starting with the Model 3 at $35,000 – is the next step in Musk’s plan and will certainly expose Tesla vehicles to more people, but it remains a luxury vehicle or at least a mid-luxury vehicle comparable to a BMW 3 Series or Audi A4.

Whether Tesla would remain a luxury brand or go further down market with its next generation, the one that will follow the Model 3 platform, wasn’t completely clear until now. While talking with the Norwegian Minister of Transport and Communications Ketil Solvik-Olsen last week, Musk made a clear statement that the 4th generation will be even more affordable:

“It [the Model 3 platform] is designed so that roughly half of people can afford the car and then with the fourth generation – smaller cars and whatnot – we will ultimately be in a position where everyone can afford the car.”

Of course, when talking about “people”, he is talking about the market of people who would normally buy a new car and not the entire world population since most people simply can’t afford a new car. He is talking about most people in the market for a new vehicle now having the option to go electric and even the option to own a Tesla vehicle, which is already significant.

The average new car sale price in the US is about $33,000. When you factor in the gas savings on the Model 3, the vehicle indeed becomes affordable for an important part of the market, even though as previously stated, it remains a mid-luxury vehicle.

Tesla could arguably moves its mission of accelerating the advent of electric transport forward while staying a luxury brand and creating compelling electric vehicles, but based on Musk’s recent comment, it does sound like Tesla plans to move even further down market and focus on mass production instead.

It’s always a risky exercise to compare Tesla to traditional automakers, but normally car companies don’t offer vehicles ranging in prices from what Musk is suggesting here. They generally breakdown in different brands and companies, like GM’s Chevrolet and Cadillac or Volkswagen’s VW and Audi. It will be interesting to see how Tesla handles selling let’s say vehicles ranging from $25,000 to $150,000. Maybe its direct sales model could be useful in managing such a car lineup?

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Fred Lambert

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