Elon Musk confirmed that Tesla is not working on its previously announced $25,000 electric car right now because it has “too much on its plate”.

At Tesla Battery Day in 2020, CEO Elon Musk announced that Tesla will be making a $25,000 electric car.

The CEO commented in the announcement:

Tesla will make a compelling $25,000 electric vehicle that is also fully autonomous.

He made it clear that this new price point is achieved through Tesla’s new battery cell and battery manufacturing effort, which could reduce battery costs by over 50%.

The $25,000 Tesla electric car, which is often referred to as the “Tesla Model 2,” has been likened to a new electric hatchback that Tesla has been planning to produce at Gigafactory Shanghai in China and export globally.

In 2020, Tesla announced plans to establish a new R&D center in China to build “a Chinese-style” electric car.

Tesla started taking design submissions for its Chinese-made small electric car that summer and started hiring for the program shortly afterward.

At the time, the automaker also released this early design drawing of a small electric hatchback. It led many to think that it was the design direction and form factor that Tesla is going for in the upcoming electric vehicle:

We recently reported on some media reports coming out of China that claimed the production of the Model 2 could start imminently, however, we warned that this isn’t likely to happen.

Last year, we reported on Musk telling employees in a company-wide meeting that Tesla is aiming to release a $25,000 electric car in 2023 and it will likely not have a steering wheel.

Now during Tesla’s Q4 2021 earnings, Musk was asked by shareholders about the status of the $25,000 Tesla and the CEO responded:

“Well, we’re not currently working on the $25,000 car. At some point, we will, but we have enough on our plate right now, too much on our plate, frankly. So, at some point, there will be.”

Musk confirmed that work on the new model is paused.

Then he added that a $25,000 model doesn’t matter as much if you achieve self-driving:

“It’s sort of the wrong question. Really, it’s really the thing that overwhelmingly matters is when is the car autonomous? I think, at the point in which it is autonomous, the cost of transport drops by, I don’t know, a factor of four or five.”

The value of autonomous driving is something that the CEO reiterated several times during the call.

Electrek’s Take

During the call, I sensed some frustration from Musk about people not appreciating the value of self-driving.

For example, when an analyst asked him how Tesla expects to sell over 3 million vehicles in 2024 with only Model 3, Model Y, and some Cybertruck, Musk said that those vehicles will sell a lot more with self-driving adding value to them. He again implied that people don’t appreciate the value it will add.

However, I don’t think that’s the problem. I think most people understand how much value self-driving capability has.

I think the issue is whether or not people believe Tesla can achieve the self-driving capability and on Musk’s timeline, which he reiterated is by the end of the year, which he has said every year since 2018.

I think some skepticism on that front is quite healthy, to be honest.

Featured image: Tesla’s $25,000 electric car rendered as sporty Model Q hatchback – dope or nope? by CarForce247.

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About the Author

Fred Lambert

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