Could Tesla be shifting its focus on becoming a premium EV only brand?
Tesla’s recent decision to discontinue the Model 3 Standard Range Rear-Wheel-Drive, its most affordable electric vehicle (EV) priced under USD40,000 (about RM171,975), marks a significant shift in the company’s approach to the EV market.
This change reflects the evolving landscape of EV production, where rising costs and supply chain challenges have become increasingly prominent. One of the primary factors influencing this decision is the skyrocketing cost of lithium iron phosphate (LFP) batteries, which are essential for EV production.
Moreover, LFP batteries have been favored for their longevity and thermal stability; however, recent spikes in raw material prices have made them more expensive to manufacture. This has directly impacted Tesla’s ability to maintain the competitive pricing of its entry-level models. In addition to battery costs, increased tariffs on Chinese imports have further compounded the financial pressures on Tesla.
As China is a significant supplier of EV components and batteries, the tariffs have led to higher costs for essential materials and parts. Consequently, Tesla has found it increasingly challenging to keep its lower-priced models accessible to a broader consumer base.
On top of that, with the discontinuation of the Model 3 Standard Range RWD, the new lowest-priced offering is the Model 3 RWD Long Range, which starts at USD42,490 (roughly RM182,678) and boasts an impressive range of 363 miles (about 584km).
While this model remains competitive in terms of performance and range, it signifies a shift in Tesla’s target market, potentially narrowing its appeal to consumers seeking budget-friendly electric vehicle options. In response to growing consumer concerns about pricing and accessibility, the brand has announced plans to introduce a new, more affordable EV by 2025.
This future model aims to cater to the increasing demand for budget-conscious EVs, reflecting Tesla’s recognition of the importance of affordability in expanding the electric vehicle market. The broader implications of Tesla’s decision extend beyond its own business model.
As one of the leading players in the EV market, Tesla’s pricing strategy could influence other manufacturers, potentially leading to a reevaluation of pricing structures across the industry. Overall, while the discontinuation of the Model 3 Standard Range RWD might disappoint budget-conscious consumers, the company remains committed to innovation and accessibility in the EV space.
So why exactly did Tesla do this now? Well your guess is as good as mine considering Elon Musk is always doing unexpected things so lets just wait and see what happens next.
