March 1st is shaping up to be a potential boom or bust for Tesla and its faithful followers. Elon Musk has touted the brand’s first-ever Investor Day, scheduled on the 1st, as the place where he’ll unveil Master Plan 3. Analysts think that a new entry-level Tesla, for now dubbed Model 2, will be a major part of the announcement.
Musk has said a lot over the years including that building a great $25,000 electric vehicle “has always been our dream from the beginning of the company.” Now, a New Street Research Managing Partner and Tesla Bull, Pierre Ferragu is predicting that Musk will unveil this car on Investor day. In fact, he’s got some very specific predictions about its makeup.
Among those thoughts is the prediction that the new Model 2 will be 15% shorter, 30% lighter, and feature a battery that’s 25% smaller compared to the Model 3. Ferragu says that those changes along with design, architecture, and manufacturing innovations will result in the Model 2 being some 37% less expensive to build.
Read: Everything We Think We Know About The $25k Tesla Model 2
If all of that ends up being true, and that’s a huge if, it would, in Ferragu’s model, mean a gross margin of over 20%. He rightly compares that to what Toyota makes on every Corolla which is less than 10%. All in all, he says that it could mean 12m units in sales by 2030 with revenue of $400 billion.
Another analyst from Guidehouse Insights believes that Musk will announce the Model 2 but only for China. A smaller car with a smaller battery and less range could work well in the Chinese market and provide a way for Tesla to slowly ramp up interest in a similar model for the U.S. market though it would likely need more range to become popular in the States.
All of this information sure sounds compelling but it sets up Tesla for a potential bust if Musk doesn’t announce the Model 2. Even if he does pull the wraps off of it, the expectations set by Ferragu could be too grand.
It’s worth noting too that setting expectations a tad too high is something that Tesla’s embattled CEO is already well-known for. If he and the team at Tesla actually pull off the aforementioned predictions from Ferragu it would absolutely shock the rest of the auto industry.
