Tesla shelves plans for low-cost Model Y

Tesla has shelved plans to sell the lowest-cost version of its latest production electric vehicle, the Model Y “crossover”, after conceding that the current design of the “standard range” version of all-electric SUV would have had an “unacceptably low” range.

The California based EV maker had promised a cheaper version of its much anticipated dual motor Model Y, which started selling for upwards of $US50,000 ($A72,000, before import costs, GST and on roads) in the US in March of this year.

But Tesla co-founder and CEO Elon Musk said on Monday in a Tweet (below) that range on the planned sub-$US40,000 version, with a single engine and smaller battery, would have been too low, at under 250 miles (400km) per charge.

Tesla’s lower-cost Model Y plans are not abandoned altogether, though, with Musk adding in a follow-up Tweet that a cheaper, single-motor Model Y would come out “in a few months.”

The Monday Tweets follow the news that a firm date had been set for the upcoming Battery Day – September 22, to coincide with its AGM – and of the possibility of a small new electric hatchback.

In what now looks like a pre-emptive strike, Tesla also announced on Friday that it had cut the price of the long range Model Y in the US by $US3,000 to $US49,990 ($A72,000), and of the Model Y Performance by $US1,000 to $US59,990 ($A86,000).

And this discount was reiterated by Musk in his Monday Tweets.

“We have reduced pricing on Model Y LR dual motor & will offer a LR single motor Y in a few months, which improves affordability, while still keeping the product excellent.”

The Model Y is an enormously important part of Tesla’s S3XY evolution, with Musk predicting it will eventually outsell the smaller Model 3 sedan on which it is based.

As in Australia, the SUV is hugely popular in the US market and remains one of the last bastions of the gas-guzzling ICE set, although the Model Y has not yet been made available for order in Australia.

As Ketan Joshi wrote on The Driven last week, mid-priced all-electric SUVs and utilities will be crucial to the speed and overall success of the transition to EVs.

While Musk and his team continue to work to drive down the cost of electric vehicles, the market continues to show strong faith in Tesla’s vision.

Tesla stock closed on Friday at $US1,544, taking its market value to a phenomenal $US268 billion ($A385 billion) – a gain of more than 10 per cent, or the equivalent of the value of the Ford motor company in a single trading session. On Monday, the stock surged another 14 per cent to a peak of $US1795, before closing the day 3 per cent down at $US1,497.