Who Will Produce The “Model 2” If Tesla Won’t?

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Like many, I’m still grappling with the idea that Tesla might not produce the “Model 2” or “Model C” — or whatever name you want to give the more affordable electric car Tesla was working on. As a short recap, Reuters reported that the project had been canceled (and had a lot of details seemingly backing that up), Elon Musk responded that Reuters were liars but didn’t provided any details to explain, and in followup tweets responding to others, Musk seemed to confirm that the low-cost passenger car project was scrapped or put on indefinite hold in favor of a robotaxi project.

Going on the assumption the lower-cost Tesla car is not happening, a question raised yesterday by a member of our team was: “Which car will take Tesla Model C’s (2’s) spot?” I had not really given that thought. I mean, my immediate thought is that no other car can, because no other automaker is Tesla. But getting to the essence of the question more, I think the key is: who could produce a lower-cost, global mass-market electric car that could sell well anywhere on Earth — in North America, South America, Europe, Asia, Africa, and Australia? Tesla’s appeal is global and its access to markets is global. That’s core to why the Tesla Model Y became the #1 best selling vehicle model in the world despite being a bit more expensive than the #1 best seller should theoretically be.

Naturally, the first company that comes to mind is BYD. BYD has the necessary scale and has massive global reach. It can certainly produce popular low-cost electric cars — it’s doing so, and starting to sell them on multiple continents. But 1) it doesn’t have the “social media star power” that Tesla has (and Tesla does have that around the world), 2) it sells several different models in several different vehicle classes, so it’s really a bit of a different approach from Tesla’s and you could even say it’s well beyond the “Model C” of its electric vehicle lineup, and 3) it doesn’t exactly have access to the US market. Nonetheless, BYD is the obvious brand of choice for this thought exercise, and I am curious to see how the BYD Dolphin and the BYD Seagull/Dolphin Mini do. Still, the BYD Dolphin and the BYD Seagull/Dolphin Mini are not what the “Tesla Model C” would be.

There’s Geely as well, the auto group that owns Zeekr, Polestar, Volvo Cars, Lynk & Co, and various other more popular brands in China. Personally, I see a brand like Zeekr being a more direct competitor to Tesla than most BYD models. However, it’s still a tiny brand with very low-volume production and sales. What model would come from Geely on the scale of a hypothetical lower-cost Tesla?

There are also the popular Chinese startups NIO and Xpeng, which have most closely followed Tesla in terms of vehicle design and tech, and which have grown quite admirably. But they are also far from the scale of Tesla, and they face the same limitations geographically as BYD, but have far less reach than BYD when it comes to South America, Africa, Asia, and Australia (that is: no reach).

One could bring in companies like BMW, Audi, Ford, GM, Toyota, or Honda — but those don’t seem like serious possibilities.

At the end of the day, I think this is one reason why the news of Tesla dropping this lower-cost passenger car model is so unfortunate and upsetting. There is no model that can genuinely replace the Model C in the role it would play. There is no option B from a single model or company. That said, if you put all of the brands above together and think about the “similar” competitors they have or could have in the years to come, you could see different people choosing different options and all of them together filling the hole left by Tesla, in addition to serving other markets and tastes as well. Diversity on the auto market is key, and it’s one big reason why the EV markets in China and Europe are so much better and more advanced than the US market.

Nonetheless, still, the world is losing if we don’t get a Model C from Tesla. That model could bring more people into the electric fold. There is no replacing it, and there’s a lot of potential being left on the table by leaving it out of the market. With the Model C being left on the drawing board, the world loses. Let’s hope reporting on that was wrong (even though it seems unlikely), or let’s hope Elon Musk changes his mind on it.