Tesla’s secret weapon against BYD

Elon Musk has reportedly green-lit not one but two new and cheaper models in the Tesla portfolio as the brand seeks to safeguard itself against falling sales and the threat of BYD.

The news surfaced in China, where Weixin reports Elon Musk has approved two new projects, reportedly codenamed E41 and D50, as an insurance policy against falling sales.

The brand has already confirmed new and cheaper versions of the Model 3 and Model Y in the USA – essentially with features stripped out to lower the price – but the two new models would be launched if the brand’s newly extended lineup fails to fire. In the US, the stripped-models are between US$5000 and US$5500 cheaper than the Model Y and Model 3's current prices.

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According to the reports, the new models could go into production as early as mid-next year, if Tesla’s price war fails to deliver the expected boost in sales. In Australia, for example, the brand's sales have fallen 23.56 per cent year on year to September, while the Model 3 is down 61.46 per cent. The Model Y, with 17,237 sales so far this year, remains the country's most popular EV.

It’s unclear what shape the new models will take — if they are yet more variants of the Model 3 and Model Y, or new models, like the long-promised US$25,000 (approx $35,000) EV, expected to be called the Model 2.

Tesla in Australia has previously confirmed to CarsGuide that the brand is “actively looking” at less-expensive models.

“Outside of the comments that you're hearing, that is exactly the information I have to hand that they are actively looking at less-expensive vehicles, but what form that takes, I don't know,” Thom Drew, Tesla's Australian chief has told us previously.

"I think it'd be great to see more variations to suit segments that we don't currently cater to. What that exactly looks like, I don't know.”

Elon Musk, though, has previously poured cold water on the idea of a US$25K Model 2, describing it as “silly”.

“Basically, I think having a regular $25K model is pointless. It would be silly,” he said on an earnings call in October last year.

It may be too little, too late, as BYD prepares to unleash a tsunami of cheap models in Australia in the next few months. This includes the Atto 2 small SUV and the Atto 1 hatchback, which is know as the Seagull overseas and will be the cheapest EV in Australia when it arrives shortly.