HomeBusinessUPDATE 3-Tesla will build a 25,000 euro car in a German factory

UPDATE 3-Tesla will build a 25,000 euro car in a German factory

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CEO Musk announced a plan for a car visit worth 25,000 euros: source

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The factory currently produces Model Y and will expand

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The staff granted a 4% pay increase

(Adds background information on the factory, wage increase in paragraphs 11-15)

By Victoria Waldersee

BERLIN, Nov 6 (Reuters) – Tesla plans to build a 25,000 euro ($26,838) car at its factory near Berlin, a source with knowledge of the matter said on Monday, in a long-awaited development for the electric vehicle maker . aiming for mass adoption of its cars.

The source, who asked not to be named, did not say when production would begin.

Tesla declined to comment.

Chief Executive Elon Musk visited the Gruenheide factory on Friday and thanked staff for their hard work, a video on social media platform X showed.

At the same meeting, he informed staff of plans to build the $25,000 vehicle there, the source said.

The German factory currently produces the Model Y, Europe’s best-selling EV.

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Musk had long planned to make a cheaper electric car, but said in 2022 that he had not yet mastered the technology and shelved the plan.

Still, sources told Reuters in September that the automaker was nearing an innovation that would allow almost the entire underside of the EV to be cast in one piece, a breakthrough that would speed production and reduce costs.

Expansion into the mass market is critical to achieving Tesla’s goal of increasing vehicle deliveries to 20 million by 2030, a tenfold increase over current capacity.

But a weak economy and high interest rates have hurt demand for electric vehicles, prompting Tesla and others to cut prices in recent months in an effort to boost sales.

The automaker plans to double the capacity of the German plant to 1 million vehicles a year, but has not provided an update on the number of cars it produces there since March, when it said it had produced 5,000 vehicles in a week – which amounts to approximately 250,000 per year.

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Local authorities said in October they had asked the automaker to provide further information on how its expansion plans would comply with conservation laws and then decide on their approval, without giving a timeframe.

Tesla also informed employees on Friday that all staff would receive a 4% pay increase from November, while production workers would receive an additional 2,500 euros per year from February 2024 – equivalent to an 18% pay increase in 1.5 years.

German union IG Metall said in 2022 that wages at Tesla were about 20% lower than those offered under collective bargaining agreements at other automakers.

($1 = 0.9315 euros) (Reporting by Victoria Waldersee, editing by Rachel More, Bernadette Baum and Emelia Sithole-Matarise)

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