Next Big Thing: A Smaller Model Y with Huge Market Potential

Could Tesla’s announced next-generation vehicle be a smaller version of the Model Y?

Photo by SCREEN POST on Unsplash

The Model Y has become Tesla’s most popular choice around the world surpassing the Model 3 as the company’s bestseller in a short time.

Also, new factories in Texas and Berlin are exclusively producing this model which will increase output in the following years.

After March Investors Day, it is clear that Tesla is aiming for a cheaper and smaller vehicle to create a new category that can reach a wider market.

Rumors are that this new vehicle will be a compact SUV based on the current Model Y. It makes a lot of sense. Who would not take advantage of the already most popular model of the brand to design a smaller version?

Cheaper

Although recent price cuts have lowered the barrier for new buyers, the Model Y is still a pricy vehicle, ranging in the US between $49,990 and $56,990.

If Tesla expects to sell 20 million cars in 2020, it cannot be just by selling $50,000 vehicles. To reach a wider customer base, there has to be a cheaper vehicle.

This compact SUV could start as low as $25,000, which will set it in the line of sight of lots of new customers willing to jump to the electric vehicle wagon but with a tighter wallet.

It will also be more suitable for other markets than traditional North America, China, and Western Europe with a high-income population. Tesla could be available to new customers in South America, Asia, Eastern Europe, and Africa.

Smaller battery

With a smaller car also comes a smaller battery.

The Model Y is a large and heavy vehicle that is quite an energy-demanding machine despite being one of the most efficient EVs in the market.

If the new vehicle is smaller, lighter, and highly efficient, the battery size can be reduced decreasing costs and letting Tesla build more cars with the same available materials.

Rumors point out that the compact model could have a 53 kWh battery.