As Tesla fans await several new vehicles, the notorious and inimitable CEO of the company, Elon Musk, has given investors and consumers alike an insight into the forthcoming Model Y. The Model Y will be the follow-up to the latest electric vehicle manufactured by the corporation, the Model 3 sedan. And Musk indicates that the next generation vehicle will be affordable for people of all incomes.

Affordable Tesla
Image Source: Autocar.co.uk

Tesla Model Y – Oslo comments

During a question and answer session at the Future Transport Solutions conference in Oslo last week, Musk spoke before a variety of privilege attendees, including Norway’s Minister of Transport and Communications, Ketil Solvik. The CEO of the electric car manufacturer suggested that economies of scale and higher volume production lines will result in price drops in the electric vehicle marketplace. And the major beneficiary of this could be the hotly anticipated Model Y.

Tesla has already confirmed that the Model 3, expected to ship in Q3 or Q4 of 2017, will have a starting price for the base unit of the vehicle of $35,000. This is significantly cheaper than any other Tesla vehicle release previously, but in Norway Musk seemed to suggest that the Model Y could be more affordable still than even the Model 3.

The electric car manufacturer has also been placing a particular emphasis on driver safety in recent months and vehicle releases, and this is underlined by the inclusion of an autopilot feature in the Model 3. This advanced driver assistance system is expected to migrate to the Model Y when it is released, but the CEO of Tesla Tesla believes that this will have minimal impact on the price of the vehicle.

“I’m super excited about being able to produce a car that most people can afford,” Musk commented. “And there will be future cars that are even more affordable down the road.” By the second statement, it is clear that musk was referring to the Model Y, and this will be an extremely exciting prospect for electric car enthusiasts, with the base price of $35,000 for the Model 3 already an attractive proposition.

“With something like the Model 3, it’s designed such that roughly half the people can afford the car,” Musk explained. “With fourth generation and smaller cars and what not, we’ll ultimately be in the position where almost everyone will be able to afford the car.” No specific time frame was mentioned for the sequel to the Model 3, but it does seem increasingly clear that it will be even less expensive than the already keenly awaited Model 3.

Oil vs electric

As is usually the case with consumer products, although Tesla has promised price slashing with future electric vehicles, consumers still want to know that they are getting the best deal possible. Thus, Musk was asked at the Norwegian event whether electric vehicles will reach the same price level as traditional gasoline-driven cars in the foreseeable future, without relying on government subsidies and tax deductions.

Musk suggested that subsidies which oil and gas-driven vehicles, and indeed industries, have enjoyed without the knowledge of the public has contributed to this phenomenon, and that once this ends, in the advent of environmental pressure, electric cars will become considerably more competitive. “The thing that people don’t totally appreciate is that every fossil fuel car is quite heavily subsidized,” Musk asserted.

Naturally, Musk has something of a vested interest in pointing to this exorbitant privilege of the traditional gas guzzler. But the figures do seem to support the Tesla CEO as well. A recent study conducted by the International Monetary Fund found that energy subsidies accounted for over $5 trillion in 2015, or over 6 percent of global GDP.

Musk also argued that the toll that gas-driven vehicles impose on the environment effectively represents another form of subsidy. This is not dissimilar to the argument which is often made in relation to fast food, which basically suggest that considering the health costs which the vast consumption of such food necessitates, is it really as cheap as it may seem?

“Whenever you have an unpriced externality, where the use of a product causes long-term damage to the environment, that’s a true cost. If that cost is not incorporated into the price of petroleum, effectively it’s a subsidy. It’s really important to appreciate this because I think a lot of people just don’t know the level of subsidies oil and gas get. It’s a figure so large that it’s difficult to comprehend,” Musk asserted.

And the Tesla CEO believes that such an incentive should be eliminated completely, enabling electric vehicles to compete on an even footing with the oil and gas industry. This is a rather natural response from someone who would massively benefit from such a decision, but there are certainly valid arguments to support the position of the Tesla founder.

Tesla future

So what does all this mean for the Model Y? No one is quite sure what to expect from this vehicle yet, even if Musk has given some clues by stating that this will be an affordable vehicle. It has been widely anticipated that the Model Y will be a variant of the Model 3, and possibly a crossover version.

There are numerous options open to Tesla, but the statements of Musk in recent days suggest that this will be very much an entry-level vehicle. This indicates possibly a smaller car than those which have been released thus far by Tesla, and possibly one aimed at single people or young couples as opposed to the obviously family-oriented products that Tesla has manufactured up until now.

What is certain is that the Model Y will face increasing competition in this niche, with major manufacturers now rushing to produce electric vehicles, and the existing marketplace also running scared to a certain extent. Just this week, a major engineer from Volvo took aim at the autopilot system in Tesla vehicles, describing it as a “wannabe.” And Apple is clearly also flexing its muscles for the release of an Apple Car, which will obviously challenge Tesla sometime towards the end of this decade.

With the electric vehicle marketplace becoming more crowded, it is clear that Tesla will produce a mass market vehicle sooner rather than later, and the comments from Musk this week suggest that the Model Y will indeed be this release.