Tesla could build a new car that will sell for nearly $27,000, per Reuters.
The company has been talking about building a sub-$30,000 EV for years.
It could be a boost for the EV transition, which has been hampered by a lack of affordable options.
Tesla is planning to build a 25,000 euro ($27,000) electric car at its Berlin Gigafactory, according to a report from Reuters citing an unnamed source.
Tesla CEO Elon Musk reportedly told staff about the plans during a visit to the factory on Friday.
He did not say when production would begin, but Tesla has previously hinted that production of a new low-cost vehicle, known as the Model 2, could begin next year.
A more affordable EV has long been a target for Tesla as it seeks to bring production costs down, with Musk saying as early as 2018 that the company was aiming to produce a $25,000 car.
Currently, the cheapest vehicle Tesla sells is the $38,990 Model 3, which was briefly available for $35,000 in 2019.
It comes as automakers grapple with a slowdown in demand for electric vehicles. Several have already pumped the brakes on the transition to battery-powered vehicles, with Ford postponing $12 billion in spending on EV manufacturing capacity and GM abandoning its targets to build 500,000 EVs by the first half of 2024.
Experts have said that a lack of low-cost options is putting customers off making the switch to EVs, with the average price of an electric car hovering at around $50,000 in September, per vehicle valuation company Kelley Blue Book.
Tesla has not been immune to the slump in demand. The electric carmaker has cut prices multiple times this year in the US, with Musk warning in a recent earnings call that economic worries were making EV customers more cautious.
The company is also facing questions about the cost of the Cybertruck, with prices for the long-awaited electric pick-up yet to be revealed despite deliveries beginning on November 30.
Musk originally said that the Cybertruck would start at $39,900 back in 2019, but that now seems unlikely, with a recent federal document submitted by Tesla suggesting that the cheapest version of the distinctive pick-up has been scrapped entirely.
Tesla did not immediately respond to a request for comment from Insider, made outside normal working hours.
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