Over the weekend, Tesla Inc (NASDAQ:TSLA) announced it will raise the price of U.S. Model Y prices on April 1st as well as of Model Y prices in Europe on March 22nd. In China, Tesla is currently offering fresh inventory discounts for Model Y trims. To maintain the sales momentum, Tesla has been aggressively lowering prices for more than a year. As a result, its auto gross margins, which peaked at 30% during 2021’s fourth quarter amid industry chip shortages, have plunged well below 20%. Even Tesla needs to figure out a way how to make an affordable EV to combat its rivals and the EV market slowdown.

Last summer, XPeng Inc (NYSE:XPEV) revealed its plans to launch a brand that’s 50% cheaper to survive a slowing EV market and price war that Tesla ignited. On Saturday, it revealed it will launch its cheaper EV brand within the next month. Last Thursday, Nio Inc (NYSE:NIO), Chinese premium EV maker, also revealed the unveiling of its mass market brand will take place in May.

Earlier this month, Nio announced the debut of its mass market brand. Nio plans the first product launch in the third quarter, which will be followed by large-scale deliveries during the following quarter. Nio’s newest brand “Le Dao”, stands for families having a happy time together as Nio is going after a new consumer segment. Since its inception in 2014, Nio has been focused on the premium end of the market with SUVs and sedans can come with even heftier price tags compared to Tesla Model S and Model Y. With its newest pitch, Nio is hoping to boost its deliveries that remained modest compared the rapid growth of some of its EV rivals.

Affordability is of the biggest barriers to mass EV adoption, a challenge that even Tesla didn’t overcome yet. Tesla has been talking about an affordable EV priced at about $25,000 since 2020. This January, Tesla CEO Elon Musk announced a low-cost compact Tesla EV is coming by the end of 2025. However, Tesla doesn’t have a good track record with deadlines, with its Cybertruck experiencing several delays before hitting the road and the EV pioneer still struggling with challenges to mass produce it. But, Tesla is no longer enjoying the dominance of the EV field it used to, so making that affordable EV is key for staying in the EV race and competing with its rivals, especially BYD Company Limited (OTC:BYDDY) that dethroned the EV king for the first time during the last quarter of 2023. 2023 was the year of pickups and 2024 is undoubtedly shaping up to be about bringing affordable EVs to the road.