Tesla Launches Affordable EVs, Faces Criticism from Industry Experts

UPDATE: Tesla has just unveiled its much-anticipated “affordable” versions of the Model Y and Model 3, priced at $40,000 and $37,000 respectively. However, the launch is already facing skepticism from industry experts, who warn that these models may not be enough to combat rising competition from Chinese electric vehicle (EV) manufacturers.

Former Nissan COO Andy Palmer, known as the “godfather of EVs” for launching the world’s first mass-market electric car, the Leaf, expressed doubts in an interview with Business Insider. He stated that the stripped-down models lack essential features and will struggle to compete with China’s robust offerings.

“If you take out the features — and Tesla has taken out an awful lot of features — then that creates a new price point, but that new price point doesn’t make it competitive with the Chinese competition, which are stacked with features,” Palmer told Business Insider.

The Model 3 and Y Standard versions were launched last week, but their appeal is already in question. Critics note that Tesla has removed key features such as Autosteer and rear screens to achieve lower price points. This move has left some investors and fans feeling underwhelmed, causing Tesla’s share price to decline following the announcement.

Palmer emphasized that the U.S. market demands EVs priced under $30,000 that come fully equipped, a requirement that Tesla’s new models fail to meet. “The US needs electric cars that are well-specified for less than $30,000,” he stated, indicating a gap in Tesla’s strategy to attract budget-conscious consumers.

With increasing pressure from Chinese automotive giants like BYD and Geely, Tesla’s position in the global market is under threat. Although these companies currently do not sell in the U.S. due to high tariffs, they are gaining significant market share in Europe and other regions, such as Brazil and Mexico.

BYD, in particular, has seen a surge in sales across Europe, where its affordable electric and hybrid vehicles are resonating with consumers. Palmer noted, “It isn’t such a big problem in the U.S., but elsewhere you have Chinese models that are coming in with lots of features at a very good price point.” He further criticized Tesla’s approach, saying, “Stripping back a car doesn’t help you.”

Chinese automakers are rapidly incorporating advanced features, such as autonomous driving and AI capabilities, into their models. For instance, BYD plans to embed self-driving technology into all its vehicles, including the $8,000 Seagull. Meanwhile, Xiaomi’s $30,000 SU7 sedan offers innovative voice-control features for home appliances.

Palmer, speaking from China, urged Western automotive brands to take the rise of Chinese manufacturers seriously and develop strategies to keep pace with them. He warned that relying solely on tariffs would not provide a long-term solution to this growing competition. “You have to address the issue rather than standing behind regulatory or tariff rules. They’ll insulate you for a while, but don’t make the problem go away,” he said.

As the electric vehicle market continues to evolve, all eyes will be on Tesla to see how it responds to these shifting dynamics and whether its new models can regain consumer confidence. For now, the urgency surrounding Tesla’s latest launch only underscores the fierce competition in the EV landscape.