Tesla’s new car is expected to be it’s cheapest model yet — here’s when you can purchase get the budget-friendly EV

Tesla Motors says it is gearing up to launch its first truly low-cost electric vehicle (EV), unofficially referred to as the Model 2. Expected to debut in 2025, the budget EV will come with an MSRP between $25,000 to $30,000 — making it one of the lowest-priced EV models to hit the U.S. market.

Currently, Tesla’s most affordable car is the Model 3, which now starts with an MRSP of around $39,000.

Tesla’s Model 2 is expected to be a hatchback, with the company offering options and upgrades similar to those available for its mid-priced cars and trucks — such as battery upgrades and service subscriptions.

While Telsa manufactures its more expensive cars in the U.S., the affordable EV is likely to be manufactured primarily at Tesla’s forthcoming factory in Monterrey, Mexico, with some production potentially also taking place at its facility in Austin, Texas.

Tesla uses a vertical integration strategy — designing its own batteries, software, and equipment, which helps control costs.

Plus, Lars Moravy, Tesla’s Vice President of Vehicle Engineering, told investors during the company’s March 1 investor day event that the Mexican factory choice — along with the use of larger, flat batteries that double as the car’s floor — will help to streamline the EV assembly and reduce costs by as much as 65%.

Still, some budget car manufacturers like Honda and Hyundai are skeptical about Tesla’s proposed price point.

“At this moment, a $25,000 [battery-powered EV] is difficult without compromising driving range,” Hyundai told CNBC in a statement. “Eventually, Hyundai expects [internal combustion engine] and [battery electric vehicle] models to reach price parity, but the exact timing is still unclear.”

That said, there are plenty of other EVs — like the Chevy Equinox EV and the Vinfast VF7 — that are aiming for future price points in the same range as the Model 2.

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