We still don’t know when it will arrive, nor its design or features. But everything anticipates that the next member of the Tesla family will arrive at a very competitive price, which may become the final nail in the coffin of the Japanese automobile industry.
The situation is curious to say the least, especially if we review the recent history of the electric car sector. And since the beginning of the last decade, the trend of electric cars has been growing rapidly, and with Japanese manufacturers as pioneers.
Names like Nissan, with its LEAF, or Mitsubishi, with the even earlier i-MiEV, managed to place the Japanese groups at the head of the industry.
However, in a few years, the situation has taken a 180-degree turn, and now those in charge are names like Tesla, BYD, and even traditional groups like Volkswagen. In addition, other traditional companies are struggling to gain a foothold in this competitive market, while the Japanese continue to decline in terms of sales and market share.
All this happens at a time when the electric car market is advancing increasingly rapidly. And as an example, the launch of the next Tesla, which is unofficially known as Model 2.
If Tesla fulfills its promise, and the Model 2 is placed below the Model 3 in terms of prices, we can think that it could start at the promised 25,000 euros. Possibly, and as history has taught us, to reach that price we will have to go through the first generation or the first models, with the start being closest to 30,000 euros. But the 39,900 euros of the Model 3 is a reference set in stone, and it is a brand for the Model 2 itself.
If Tesla’s most economical proposal manages to place its prices around 30,000 euros, it will undoubtedly be a before and after for a sector where, for example, the Volkswagen ID.3 starts at 42,740 euros in Spain, and even the extremely competitive MG4, does so in its most economical version at 30,690 euros.
The Tesla Model 2 and the Japanese industry
But Chinese groups are a breed apart and can afford low margins in their current expansion phase. The big problem here is the traditional groups, especially the Japanese who, for reasons that no one understands, have turned their backs on the electric car.
This is in a market where surveys indicate that close to 50% of customers in the main world markets plan to make an electric car their next purchase.
Traditionally, electric cars have had little demand among Japanese consumers. However, the Tesla brand has become increasingly popular among Japan’s younger and wealthier urban dwellers, a trend that many compare to that experienced in the mobile phone sector, where Japanese brands were swept by the iPhone.
Furthermore, in 2021, the Japanese government launched a program to achieve a complete transition to electric cars by 2035, increasing public aid for the purchase of these, reaching 800,000 yen, or 5,000 euros at the exchange rate. Aid that is benefiting the brands that are betting the most on electric cars.
That is why expectations for the Model 2 are very high for the Japanese market, which mainly demands compact vehicles. Tastes where the new proposal seems to fit perfectly since it adds a predictable attractive design, technical characteristics to match, and a price that will be placed at the same level as models with a combustion engine or hybrids.
The issue is the deadlines. And the thing is that Japanese manufacturers have finally seen the danger of continuing with the path of denialism, and have begun the design of plans to triple their production and evolve their traditional production systems.
But if Tesla manages to put its Model 2 on the market, with a price of between 25 and 30 thousand euros, and does so before 2025, Japanese groups will undoubtedly be left without arguments to fight against a brand that it will have achieved with five years of difference an economy of scale and a reduction in costs that will be very difficult to match.
California, the canary in the cage
We can see the future in the evolution of some markets where Japanese manufacturers, such as Toyota, have had some of their main locations. For example, California.
In 2017, Toyota dominated the California market with registrations between 80,000 and 90,000 vehicles per quarter. At the time, Tesla was a minor nuisance, with volume of just 4,300 units in the first quarter of that year. A year where we remember, the Model 3 was launched.
In the second quarter of 2023, the situation has completely turned around. Toyota’s sales fell by more than 20,000 from 2017 to 67,482 registrations in the second quarter of 2023, while Tesla increased to 69,212 registrations, allowing it to surpass Toyota for the first time.
In addition, the Tesla Model Y became the best-selling car, taking into account all technologies, in the California market.
This is called a historic change in a market, that of California, which sets the trend that the entire country subsequently follows. Second world power in sales, only behind China.
Something that big names are aware of, such as the Japanese Prime Minister, Fumio Kishida, who in an article published in the Nikkei newspaper last March, indicated that: « Toyota could follow the same path as the corporate heavyweights of the past in the mobile phone industry, which were quickly left out of the market after the appearance of Apple’s iPhone.