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Tesla is reportedly gearing up to launch a new affordable vehicle, tentatively referred to as the 'Model Q,' in the first half of 2025. Deutsche Bank analysts, following a recent meeting with Tesla's head of investor relations, Travis Axelrod, disclosed the vehicle's projected price—less than $30,000 when including subsidies. Without U.S. EV tax credits, the price could rise to $37,499. Analyst Edison Yu characterized this move as part of Tesla's strategy to expand its total addressable market (TAM), with the Model Q joining a lineup potentially augmented by other innovations such as a longer-wheelbase Model Y variant for China.

The announcement aligns with Tesla's long-term goals of broadening its appeal by diversifying its lineup and targeting underserved market segments. The Model Q would be smaller and lighter than the current Model 3—by approximately 15% and 30%, respectively. Analysts speculate it will serve as an entry-level model with streamlined features to keep costs down while maintaining Tesla's reputation for cutting-edge technology.

China's Role in Tesla's Growth Strategy

In addition to the Model Q, Tesla appears poised to target the Chinese market with a new variation of its Model Y. Rumors suggest this vehicle will feature a three-row configuration and a longer wheelbase, aiming to appeal to families and compete with domestic automakers like BYD. While Tesla China has declined to confirm specifics, the move could address growing competition in a market where affordability and versatility drive consumer preferences.

This potential Model Y variant reflects Tesla's strategy of tailoring its offerings to regional needs. By focusing on China—a crucial EV market—Tesla could enhance its competitiveness while reinforcing its global growth objectives. According to Deutsche Bank, this diversification in product design could be instrumental in boosting Tesla's production and delivery numbers in the coming years.