Tesla says it will build electric vehicles at more affordable prices – maybe as soon as 2025 – amidst recent reports that Tesla CEO Elon Musk has scrapped plans for a cheaper "Model 2" car in favor of pushing out Robo-taxis. However, Musk did not clarify whether the lower-cost EV will be a completely new model for Tesla or simple versions of its existing vehicles.
"In terms of roadmaps for a new product, there was a lot of talk," Musk said during the company's earnings call in the first quarter, addressing concerns investors expressed last month about delayed plans for a lower-cost EV. "We updated our future vehicle lineup to expedite the introduction of new models." Musk said we might see the vehicles by early 2025, if not later this year.
"In terms of roadmaps for a new product, there was a lot of talk"
The vehicles will integrate "aspects" of the next-generation platform with the current platform that underpins the company's best-selling Model 3 and Model Y. "Our current production lines are much more efficient," Musk said, predicting that this could accelerate the company's production to over 3 million vehicles per year.
Tesla reported revenues of $21 million in the first quarter of 2024, a 9% drop year-over-year. Net income fell by 55% to $1.1 billion. The company sold fewer models in this quarter as demand for electric vehicles cooled off. Analysts say a cheaper model is crucial for Tesla's future growth.
Musk began the call by addressing concerns that the market emphasizes hybrid vehicle development over entirely electric vehicles, which he believes is "not the right strategy."
"We’ll talk more about that on August 8."
"We’ll talk more about that on August 8," Musk said, emphasizing again that 7 million vehicles by the end of the year will be part of Tesla’s Robo-taxi fleet. August 8 is the date when Tesla plans to unveil a new Robo-taxi vehicle.
Despite Tesla’s promises to release more affordable EVs, it did not confirm whether entirely new cheaper models will arrive. Cheaper models may simply replace the Model 3 and Model Y, which alone generate most of the company's revenue.
Currently, you can buy a Model 3 for $38,990, which is nearly the cheapest the car has ever been – but still not at the promised sub-$35,000 mark. The company promised that a straightforward "penny drive" manufacturing process will further reduce costs.
When directly asked by an investor about cheaper EVs like the Model 2 and where Musk's "heart" lies, Musk largely closed the topic. In contrast, he was happy to elaborate on autonomy, self-driving, and even aliens.
"If you have a great product at a great price, sales will be great," Musk said at one point, responding to a question about value. He said Tesla will continue to improve cost efficiency to deliver better "value for money."
