Tesla’s Reversal on $25,000 Electric Vehicle

Tesla’s Reversal on $25,000 Electric Vehicle

Tesla’s initial plans for an affordable, human-driven $25,000 electric vehicle were met with enthusiasm in the automotive industry. However, a Reuters article in April 2023 reported that the automaker had abandoned those plans, prompting a sharp decline in Tesla’s stock. CEO Elon Musk initially denied the report, stating that Reuters was “lying.”

Musk’s Admission

Six months after the initial Reuters report, Musk appears to have acknowledged the cancellation of Tesla’s $25,000 human-driven EV. In an October earnings call, he stated that producing such a vehicle would be “pointless” unless it was fully autonomous.

Focus on Robotaxis

Since the Reuters article in April, Musk has shifted Tesla’s focus towards robotaxis and autonomous vehicles. He has unveiled a prototype of the Cybercab, a two-door, two-seat, fully autonomous vehicle, which Tesla plans to produce in 2026.

Challenges of Autonomous Vehicles

Tesla faces significant technological, regulatory, and legal hurdles in developing and deploying fully autonomous vehicles. Musk’s promises of autonomous driving capabilities have been made for over a decade, but the company’s current models still require a human driver paying strict attention.

Teslas Ambitious Production Goals

An affordable Tesla for human drivers was once a cornerstone of the company’s strategy to become the world’s leading automaker. Tesla aimed to produce 20 million vehicles annually by 2030, more than tenfold its current output. However, the company has recently dropped this ambitious goal from its sustainability report.

Analyst Expectations

Analysts believe that Tesla’s future affordable vehicles will likely be built on existing platforms and priced in the mid-$30,000s. Musk previously described the next-generation model as requiring “revolutionary manufacturing technology,” but has since outlined plans for less-expensive models that can be produced using Tesla’s current assembly lines.

Cybercab’s Uncertain Market

The Cybercab’s unique design and limited seating capacity have raised questions about its target market. Some analysts expected a robotaxi with more room for passengers and luggage, but Musk has described the Cybercab as “optimized for autonomy” and “affordable at roughly $25,000.”