Tesla Motors/via REUTERS
- Tesla finally launched "affordable" versions of the Model Y and 3 last week.Ex-Nissan COO Andy Palmer told Business Insider the new models can't compete with Tesla's Chinese rivals.Palmer is known as the "godfather of EVs" for launching the world's first mass-market electric car.
Tesla's "affordable" EVs are finally here — and not everyone is impressed.
Andy Palmer, the former Nissan COO who launched the Leaf, the world's first mass-market electric car, told Business Insider that Tesla's new Standard models won't help it fight off fierce competition from China's EV giants.
"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.
Tesla launched the Model 3 and Y Standard, which cost $37,000 and $40,000 respectively and come without features such as Autosteer, rear screens, and radios, last week.
The lack of features and high price tags left some investors and fans underwhelmed, and Tesla's share price fell after the new models were revealed.
Palmer, who is known as the "godfather of EVs" for his work developing the Nissan Leaf, said the new Model Y and 3 failed to fill the need for truly affordable EVs in the US.
"The US needs electric cars that are well-specified for less than $30,000," said Palmer.
Tesla did not respond to a request for comment from Business Insider.
Investors have been calling for Tesla to launch more affordable EVs for years. Last week, the Cybertruck maker unveiled the new models, which cost around $5,000 less than their premium counterparts.
It comes as Tesla faces growing pressure from upstart Chinese manufacturers. Although companies like BYD and Geely don't sell their cars in the US due to high tariffs, they are now rapidly winning market share in Europe and other global markets like Brazil and Mexico.
BYD's lineup of affordable electric and hybrid cars has proven especially popular in Europe, with the Shenzhen-based company seeing sales surge even as Tesla's have plummeted.
"It isn't such a big problem in the US, but elsewhere you have Chinese models that are coming in with lots of features at a very good price point," said Palmer.
"Stripping back a car doesn't help you," he added.
Chinese automakers have increasingly prioritized high-tech features such as autonomous driving and AI assistants as they battle to win customers.
BYD announced in February that it would incorporate advanced self-driving tech into all of its cars, including its cheapest model, the $8,000 Seagull. Meanwhile, Xiaomi's $30,000 SU7 sedan allows drivers to voice control home appliances from their car.
Palmer, who spoke to Business Insider from China, said Western brands needed a "wake-up call" on the rise of Chinese automakers and had to develop strategies to match them, rather than simply relying on tariffs to keep BYD and its rivals out.
"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.
