Tesla's $25K 'Model 2' to Face Stiff Competition from GM's Revamped Bolt

Tesla's next-generation low-cost vehicle is expected to debut in 2025. However, at least one US competitor is likely to already have a next-generation low-cost product on the market.

Tesla Next-Generation $25K ‘Model 2’ Will Face Low-Cost U.S. Rival

The success of Tesla's vehicle, typically referred to by analysts as the "Model 2," is dependent on the company's next-generation production process — known as Tesla 3.0, as per Forbes.

“We're very far along on our next-generation low-cost vehicle. And this is really going to be profound, not just in the design of the vehicle itself, but in the design of the manufacturing system,” CEO Elon Musk said at the fourth quarter 2023 earnings conference call on Wednesday.

The pricing is estimated to range between $25,000 and $30,000. The vehicle (or vehicles) will be manufactured at the Gigafactory in Texas, where the Cybertruck is now produced, followed by Mexico and other "locations around the world," according to Musk.

What is the Tesla 3.0? If 1.0 was the low-volume, expensive Model S and 2.0 was the high-volume, lower-cost Model 3 and Model Y, then 3.0 represents the ultra-high volume next-generation vehicles that could allow Tesla to outperform carmakers such as Mercedes-Benz, Honda, and Nissan in terms of output.

“We are between two major growth waves. The first one began with the global expansion of Model 3 and Y, and we believe the next one will be initiated with the next-generation platform,” Vaibhav Taneja, Tesla Chief Financial Officer, said during the earnings call.

GM's Electrifying Strategy: Revamping the Bolt with Ultium for a Competitive Edge

General Motors, which began producing electric vehicles over a decade before Tesla, has its own ambitions for a next-generation low-cost vehicle. The Bolt, which was the third best-selling EV in the United States in 2024, will return to GM's Ultium battery architecture in 2025, GM CEO Mary Barra announced in December.

Since its introduction in 2016, the Bolt has been the leading EV in terms of value for money in the United States. It begins around $27,000 and falls below $20,000 when the point-of-sale federal tax credit is applied.

“GM plans to introduce its own affordable competitor, a new Chevrolet Bolt on the Ultium platform, in 2025. Odds are the Bolt will scoop up sales long before Tesla launches the new small crossover,” Alisa Priddle, Detroit Editor at MotorTrend, told me.

It remains to be seen how great the gap between the two major development waves described above will be. “It also means Tesla will have gone many years with virtually no new product — the Cybertruck will be the only new nameplate in as many as four years and Musk has said its [Cybertruck] rollout will be slow,” Priddle said.

According to a GM Authority report, one method GM will save money is by employing lithium iron phosphate, or LFP, battery cells instead of the nickel-cobalt-manganese-aluminum, or NCMA, chemistry found in current Ultium batteries. LFP batteries are less expensive and provide less of a fire risk.

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