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Tesla initially planned this launch for mid-2025 but accelerated it to respond to the evolving market landscape. The new model is expected to be a simplified, stripped-down version of the Model Y—similar in appearance but more cost-effective. Its release is poised to dramatically expand Tesla's market reach into the middle-income segment, which currently has limited access to Tesla's premium offerings.
This strategy not only offsets potential demand fall-off but also offers a transformational opportunity for Tesla. By making EVs affordable—likely around $30,000—Tesla can potentially multiply its market size by about eight times, from 2 million cars annually to up to 16 million. This could revolutionize Tesla's sales volume and profitability.