Tesla is preparing to launch its first low-cost electric vehicle (EV), unofficially known as the Model 2, projected to debut in 2024.

The Model 2 is anticipated to be priced between $25,000 to $30,000, making it one of the most affordable EV models in the U.S. market.

Currently, Tesla's cheapest car is the Model 3, starting at approximately $39,000.

The Model 2 is expected to be a hatchback and will offer various options and upgrades, including battery enhancements and service subscriptions.

Production of the budget-friendly EV is likely to be centered at Tesla's upcoming factory in Monterrey, Mexico, with possible additional production in Austin, Texas.

Tesla follows a vertical integration strategy, designing its own batteries, software, and equipment to control costs.

Tesla's Vice President of Vehicle Engineering, Lars Moravy, mentioned that the choice of the Mexican factory and the use of larger, flat batteries integrated into the car's floor will significantly streamline assembly and reduce costs by up to 65%.

Some budget car manufacturers like Honda and Hyundai express skepticism about Tesla's projected price point, stating that achieving a $25,000 battery-powered EV without compromising driving range is challenging at present.