Remember when Elon Musk said the idea of building a $25,000 Tesla was absurd given that the future of driving was going to be autonomous? The future may still be autonomous, just not at the pace that Musk may have envisioned a couple of years ago when he effectively shelved the company’s plan to make a true cheap car.
The new report comes from Reuters, which cites both internal and external sources that indicate that the company has reached out to suppliers in order to build an affordable Tesla model. This shouldn’t feel like big news for a few reasons.
First, Ford is in the process of creating three different electric cars that are under $30,000. Second, the company is heading towards a third year of falling sales as competition increases and its new models have dwindled. Third, Tesla spent a couple of years talking about building it, only to abandon the project.
Why did Tesla abandon it? The company decided it wanted to skip ahead to something it deemed more important, which is a Tesla CyberCab. Musk was quite severe when talking about the $25,000 car that investors kept asking about, saying in an investor call:
So, I think we’ve made very clear that we’re — the future is autonomous. I mean, it’s going to be — I’ve actually said this many years ago, but that in my strong belief and I believe that is panning out to be true, very obvious retrospect is that the future is autonomous electric vehicles. And nonautonomous gasoline vehicles here will be like riding a horse and using a foot bone. It’s not that there are no horses.
Yes, there are some but they’re unusual. They’re niche. And so, everything is going to be electric autonomous. I think this is like it should be, frankly, blindingly obvious at this point, that is the future.
So, a lot of automotive companies, most of the companies have not internalized this, which is surprising because we’re shouting from the rooftops for such a long time.
That’s right, every other automaker is just too stupid to listen to Musk and should be building autonomous cars. He went on:
So, anyway, basically, I think having a regular 25K model is pointless. It would be silly. Like it would be completely at odds with what we believe.
That makes this section from the Reuters article hit a little different:
The Tesla employee declined to confirm or deny details of any specific vehicle but said, in general, the automaker now aims to build models that would be driverless but offer a human-driven option.While aiming for full autonomy across its lineup, the person said, Tesla realizes many global markets won’t see meaningful adoption – nor regulatory acceptance – of driverless vehicles for years. Preserving the option to build a particular model with or without driving controls could enable more sales and help ensure Tesla can keep its car factories running near capacity, the person said.
Reuters sources seem insistent that this isn’t just a de-contented Model 3 and Model Y, which was the company’s last cheap car proposal. Currently, the cheapest Tesla is the $36,990 Rear-Wheel Drive Model 3. That’s a lot of car for the money, but it’s way more expensive than the cheap Tesla that was originally envisioned.
The goal, according to these sources, is to build a car that’s smaller and more price-competitive with less-expensive vehicles in China, and it seems like that’s where the production will begin. Right now, the company is having to compete with popular cheap electric cars like the best-selling Geely Star Wish and BYD Seagull, which start around $10,000, or a third as much as the cheapest Model 3.
How can Tesla save money? Some concepts proposed in the article are a smaller battery, which would result in a shorter range but lower the cost of the most expensive part of most electric cars. Additionally, most of the cars it would compete with are single-motor vehicles.
This isn’t to say that Tesla has given up on autonomy, and it’s possible that even these cheaper cars get cameras so that they can eventually be equipped with some version of FSD. If you put rear seats (or front seats, I guess) in something that’s like the smaller CyberCab, then I think you’ve got something that could be an attractive and affordable option. Tesla is good at building electric cars at scale and, with lower sales, probably has some capacity to spare.
As with all things Tesla, none of this has been fully green-lit, according to the article. Musk can change his mind, and often does. He could go on his social platform and tell everyone this article is bunk, and that building a new car is like joining the lamp-lighter’s union.
I can’t wait for the next investor day later this month!
Source: Tesla
I’d like a 3, they’re fast, look good, and have strong range. But the bridge troll running the company doesn’t instill much faith in its long term viability. A few years ago he claimed Tesla was a tech firm, not a carmaker anymore. Now this brain ooze.
I was kinda hoping to watch Musks insane hubris burn the whole company down but I guess getting a good cheap EV and a lot of people getting to keep their jobs is cool too.
Tesla could also whip up a CPO program that gets them into that 15-30K market, with a range of offerings, without the cost and expense of building new cars.
Being at the vanguard of fashion matters less than proven reliability for these more practical buyers.
Refurbish and update the old ones more comprehensively- essentially give it a “full mechanical reset” – clean up the cosmetics, profit. Offer financing.
They already have a CPO program and have a number of sub-30k listings available. The cars have the balance of whatever original warranty plus an extra year of B2B.
Yeah – I mean a sort of “Super-CPO” where the cars are basically “zero-miled” and better backed
So Tesla is going to revive their flagging sales by going toe-to-toe with the Chinese on price. In China. Good luck with that!
Reading those quotes makes my head hurt just because of the stilted, overly-parenthetical diction.
A strongly-led comms shop will be an essential part of getting Tesla out of the ditch they dug and then drove into.
“The future” is such an obfuscatory device. You. Need. Revenue. Today.
What are you making to expand your market share? The high end is saturated. There is obvious pent up demand between 15-30K. Your early advantage and brand strength have been eroded but it’s probably not too late.
You’ll need to innovate and shock people out of their collective dazes. That doesn’t mean more tech and complexity. It means flexing the muscles that have made Sandy Munro and John McElroy go all heart-eyed.
BUT – and this is the twist – don’t try to dictate how people do what they do. Other Teslas, with their screen interfaces and feature-heavy ethos turned owners into students. Instead, lean VERY hard into Human Factors.
It’s time for Tesla to become the student and build the solution that works for people. Give them the things they want and need in a way that feels like second nature. It’s good design, good UX, great UI – but in the physical, made-of-atoms and contains carbon sense, not software.
Respect people, understand they can’t tell you exactly what they want or need. Find out what that is and build it.
It won’t look like a uselessly cramped Cybercab – but the company can probably do something distinctive and at least as practical as a Seagull.
The talent and processes and components are all there.
Small EVs can use smaller batteries. Modest performance is still more than adequate. Free people from being their own IT department and focus on SIMPLICITY AS SOPHISTICATION (by which I do NOT mean performative stark minimalism) and it could be really convincing.
A great plan to communicate it out by demonstrating the benefits (you know, advertising and PR) should be part of it.
But – none of this is going to happen unless the company changes its thinking away from making demands of customers, instead of being the one who senses and responds to the needs of the people who buy the things. Keep being arrogant, keep losing.
I think what Elon is saying that, ultimately, money talks.
If you want an EV but can’t justify the many higher-cost models out on the market, and feel Elon or Tesla is far too toxic, you can plug your nose and justify to yourself that it’s for the ‘greater good’.
But, bigger, do these lower-cost models count towards his bonus structure to get his trillion-dollar-payday on a per-unit basis, or a per-profit basis?
I’m pretty sure the Cybercab is the $25,000 Tesla, hastily repackaged as an autonomous vehicle after Musk’s abrupt change of priorities
If that is the case, then you can see how development work could pivot back to where it left off easily enough, just with some needless delay and extra expense
A short wheelbase 2 seater is another way to get production costs down, and a smaller, lighter car doesn’t need as big of a battery to get decent range.
It could also be that Tesla engineers really wanted to build a proper follow up to the original Roadster, and pitching it as a cheap commuter car was the only way to get Elon even slightly interested
Biggest problem with a 2 seater is there’s almost no room in the market for one not named “Corvette” or “Miata”.
Especially at the low end of the EV market where four real doors, 5 seat belts and suitability for use as a “second” family car or an Uber hack are both important to large chunks of buyers.
Its a hindrance, to be sure, but there’s also not many EVs in the sub-$30k space, and, among two seaters in general, only the Miata is there, and it doesn’t come with a permanently fixed roof. It would be a gamble, but it isn’t a guaranteed failure if its done right, the odds are maybe slanted a bit against it though.
I’d expect it to at least be Tesla’s best selling new product since the Model Y though. At least for the first year or two
Many of us, myself incl., will say that we just need a commuter car – but it also needs to be capable of going to Home Depot afterwork to pick up a few things for the house, or the groceries for the whole house, or pick up the kids from their friend’s houses. And then, on the weekend, we’re both running errands for all the things that need to be done. So a 2-seater has such limited sales potential unless it’s a 3rd car – and what’s the point if, as others noted, it’s not a Miata?.
Tesla is going to target urban dwelling millennial yuppies who are either DINKs or single with a dog, and can’t stretch to a Model 3 because of too many streaming subscriptions and Doordash charges?
If that’s the case, it’s already a loser. 2-seat cars that cost $30K are not practical for most people.
Versatility is what people need. Over-optimizing for commuting results in a car that’s useless for the wide array of things we need our vehicles to accommodate.
CUVs are more than simply fashion.