Cheapest Tesla Model 2 to hit volume production much faster than the Cybertruck and its 14-inch suspension travel

The cheapest Tesla car, tentatively named Model 2, will be built on its next-gen platform "at a units per minute level that is unheard of in the auto industry," tipped the company during its Q3 call with investors.

Unlike the Cybertruck "special product" that "will be incredibly difficult to bring to market, to reach volume, to be prosperous," the Model 2 will be "a fast ramp." Elon Musk, who was once sold on the futuristic looks of the Model 2, now calls what will inevitably be Tesla's cheapest car a "utilitarian" vehicle.

"It will be still beautiful," he added quickly during the earnings call, but it won't "fill you with magic" as it won't have features like a "14-inch suspension [travel]" or the other "bells and whistles" of the Cybertruck.

Unfortunately, all that "incredible complexity" that comes with a product "newness" means that the Cybertruck won't be produced in any meaningful quantities until way into 2025. Elon Musk even pegged 18 months as the time it will take from the November 30th Cybertruck launch date to the annual production rate of 250,000 units that has been teased by Tesla before.

I think we’ll end up with roughly a 0.25 million Cybertrucks a year. I don’t think we’re going to reach that output rate next year. I think we’ll probably reach it sometime in 2025. That’s my best guess.

Thus, a Cybertruck production enough to equalize demand with supply and be cash flow positive for Tesla may only happen in the summer of 2025. Coincidentally, that is when the Tesla Model 2 is expected to be released, too, and it will apparently hit the ground running with scale of production rivalling the Cybertruck at that time.

Tesla reportedly moved the initial Model 2 production plans from its future Gigafactory in Mexico to Giga Texas. That's where the Cybertruck and its special 4680 battery cells are being built as well. Both new Tesla models will thus compete for production space, employees, and resources there, and Elon Musk outlined the Giga Texas challenges that will follow:

We’re actually only occupying a tiny corner of the land that we have. We could technically do all the scaling, research just here. So, personnel is our biggest challenge and the greater Austin area only has -- generously the greater Austin area only has 2 million people. So people are moving here and they’re willing to move here, but there is somewhat of a housing crisis. They got to live somewhere.

As for Giga Mexico, the employee relocation problem would be even greater and Elon Musk advised that Tesla will be taking it slower than initially envisioned in an era of high interest rates and economic uncertainty. "We’re going to build it. And I mean think we’ll start the initial phases of construction next year," he vowed, but also noted that the scars from the Model 3 production ramp when Tesla nearly went bankrupt still linger in his mind. "A lot of wars going on in the world obviously as well, so - and we have room here," he added, referring to the Gigafactory in Texas.

The Tesla Model 2 is expected to be announced next year at a sub-$25,000 price before federal tax credit subsidies, and launched in 2025. "Let’s be clear, it will be cool, but it’s utilitarian," reiterated Musk. "It can get you from A to B" may not sound as exciting as a Cybertruck, but for many prospective EV buyers who have been sitting on the fence due to high prices, a Model 2 could be exactly what they've been waiting for and Tesla's recipe for mass electric car adoption.

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