Tesla to Launch Cheaper Model Y as Tax Incentives Fade
Billionaire Elon Musk’s electric vehicle company, Tesla, is set to reveal a more affordable version of its Model Y on Tuesday. The decision comes in response to the company’s initiative to launch a more budget-friendly variant, aimed at mitigating the effects of diminished US incentives for electric vehicles. The new base version of Model Y is identical to the vehicle that the company began showcasing on its social media over the weekend. The more affordable model is said to forgo certain features and utilize less premium materials in response to the elimination of the federal tax credit of up to $7,500, which was discontinued by the US government this month. Nonetheless, the company’s posts on X enhanced investor sentiment, resulting in a 5.4 per cent increase in its shares on Monday. The stock has experienced a 12 per cent increase thus far this year.
During Tesla’s most recent earnings call, officials stated that although production of a more affordable version commenced in June, they opted to postpone increasing output until after the US phased out its electric vehicle tax credits. Vaibhav Taneja and Lars Moravy provided limited information regarding the new car, preserving confidentiality until Elon Musk discloses further details. “It’s the Model Y,” Musk remarked, humorously suggesting that he would “let the cat out of the bag. The desire to purchase the car is significant; however, individuals lack sufficient funds in their bank accounts to make the purchase. So, the more affordable we can make the car, the better.” The electric vehicle company lowered the cost of the Model Y, in part, by reengineering its battery pack and motor. Last week, the company revealed that it achieved record deliveries of 497,099 vehicles globally for the July–September quarter. The expiration of the US tax credit has led to a surge in short-term sales; however, the subsequent pull-forward effect may negatively impact electric vehicle demand in the months ahead. Musk had previously warned in July that Tesla could encounter “a few rough quarters” after the conclusion of US incentives.
A report indicates that the more affordable version of the Model Y is intended to be approximately 20 percent less expensive to produce than the updated Model Y and has the potential to reach an annual production of around 250,000 units in the US by 2026. In early September, federal auto safety regulators initiated an investigation into potential defects in Tesla doors, which allegedly left parents with children trapped in the back seat, prompting them to break windows to rescue their kids. A preliminary investigation has been initiated by the National Highway Traffic Safety Administration regarding the 2021 Tesla Model Y, following nine complaints concerning the failure of electronic door handles, which may be attributed to low battery voltage.
The company has outfitted its vehicles with manual door releases located inside. However, NHTSA observed that children might not be able to reach or understand how to operate these releases. In four of the reported cases, parents were compelled to break the car windows to gain access to the vehicle. The investigation into Tesla’s top-selling model comes after several previous incidents concerning faulty door mechanisms, which in certain instances allegedly left drivers trapped inside their vehicles following accidents or power outages.
