Tesla to unveil cheaper version of Model Y to offset loss of tax incentives

Billionaire Elon Musk's electric vehicle company, Tesla, is planning to unveil a cheaper version of its Model Y on Tuesday (local time), Bloomberg reported.

 

The move follows the company's decision to introduce a more affordable version to offset the impact of reduced US incentives for electric cars.

 

The new base version of Model Y is the same vehicle that the company started posting on its social media over the weekend. The lower-priced model will reportedly lack some features and use less premium materials to make up for the loss of the federal tax credit of up to $7,500, which the US government discontinued this month.

 

However, the company’s posts on X boosted investor sentiment, sending its shares up 5.4 per cent on Monday. The stock has gained 12 per cent so far this year.

 

'Let the cat out of the bag'

 

During Tesla's most recent earnings call, the officials said that while the production of a more affordable version began in June, they decided to delay ramping up output until after the US phased out its electric vehicle tax credits. Chief Financial Officer Vaibhav Taneja and Vice-President of Vehicle Engineering Lars Moravy offered few details about the new car, maintaining secrecy until Elon Musk revealed more information.

 

“It’s the Model Y,” Musk said, joking that he would “let the cat out of the bag". "The desire to buy the car is very high; it’s just that people don’t have enough money in their bank accounts to afford it. So, the more affordable we can make the car, the better."

 

The electric vehicle company reduced the Model Y’s cost partly by reengineering its battery pack and motor.

 

Last week, the company announced record deliveries of 497,099 vehicles worldwide for the July–September quarter. While the expiry of the US tax credit boosted short-term sales, the resulting pull-forward effect could weigh on electric vehicle demand in the coming months. Musk had earlier cautioned in July that Tesla might face “a few rough quarters” following the end of US incentives.

 

According to a Reuters report, the more affordable version of Model Y is designed to be roughly 20 per cent cheaper to produce than the refreshed Model Y and could scale to about 250,000 units a year in the US by 2026.

 

Tesla faces probe over faulty doors

 

Earlier in September, the federal auto safety regulators launched an investigation into possible defects in Tesla doors that reportedly left parents with children trapped in the back seat and forced to break windows to get them out, Associated Press reported.

 

A preliminary investigation was launched by the National Highway Traffic Safety Administration (NHTSA) into the 2021 Tesla Model Y after receiving nine complaints about electronic door handles failing, possibly due to low battery voltage.

 

The company has equipped its vehicles with manual door releases inside. However, NHTSA noted that children may not be able to reach or know how to use these releases. In four of the reported cases, parents had to break the car windows to access the vehicle.

 

The probe into Tesla’s best-selling model follows multiple past incidents involving malfunctioning door mechanisms, which in some cases reportedly trapped drivers inside vehicles after crashes or power failures.