Tesla announced that it is changing its product plan to introduce cheaper electric cars to be built on its current production lines.
Tesla has been working on its ‘next-generation vehicle platform’ that is expected to enable a new manufacturing process called “unboxed” that should produce cheaper electric vehicles. The automaker has previously talked about two upcoming vehicles on the platform:
- a model cheaper and smaller than Model 3, sometimes being referred as the “$25,000 Tesla” or “Model 2”
- Tesla Robotaxi: a new vehicle designed from the ground-up for self-driving.
A few weeks ago, Reuters reported that “Tesla has canceled the long-promised inexpensive car”. CEO Elon Musk called the publication “liars” for reporting that.
However, Electrek reported last week that Tesla had indeed stopped all work on the new planned cheaper vehicle based on the new platform. Inside sources confirmed that Musk canceled a Gigafactory Texas expansion for the new vehicle codenamed NV9.
Today, with the release of its Q1 2024 financial results, Tesla confirmed the change of plans for its cheaper electric vehicles.
Tesla started by writing:
“We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025.”
Musk had previously announced plans to build next-gen vehicles toward the end of 2025.
Tesla continued:
These new vehicles, including more affordable models, will utilize aspects of the next generation platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.
This confirms that more affordable vehicles are still confirmed, but not on the new production lines based on the “unboxed” system, which is in line with our previous report that Musk shut down the expansion for NV9.
Tesla explained the reason behind the change:
This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex efficient manner during uncertain times. This would help us fully utilize our current expected maximum capacity of close to three million vehicles, enabling more than 50% growth over 2023 production before investing in new manufacturing lines.
Finally, Tesla confirmed that its previously announced Robotaxi will still be built with the new “unboxed” system:
Our purpose-built robotaxi product will continue to pursue a revolutionary “unboxed” manufacturing strategy.
Musk previously said that Tesla plans to unveil its new Robotaxi on August 8th.
Electrek’s Take
Some good and some bad news. Without the unboxed system, it’s likely that we can kiss goodbye to the previously mentioned $25,000 price point.
Top comment by Pedro
This is good news, and seems smart: Building in current factories using current techniques...Smart. The next best thing to actually having a modular platform. Why reinvent the wheel you actually invented?
Regarding price: $25K was an arbitrary number thrown out some years ago: Anything around 30 will be fine. There will be a synergy with size. In much of the world, Tesla's are large cars. A lot of people prefer, or want smaller cars. Sometimes this equates to low price, but sometimes a nice small car is not cheap. Mainly in the US is "small" automatically equated with cheap.
The comments about the Y and 3 being stale are a little lazy. The Y was the best selling car in the world last year, and the 3 was significantly updated and will do well in the sedan sector. But having just 2 mass market cars is not a good thing, and that in itself seems stale after a few years. So a new small car will be an important change in how Tesla is viewed.
A small car at a fair price will sell very well worldwide. So will a performance version at a higher price. Doing so without revamping manufacturing is smart...finally something smart. And if done in a timely manner, it will really boost the company. This is positive news to me.
Tesla is signaling still cheaper EVs coming, but the automaker has already maxed out a lot of the cost-cutting on the existing platform and manufacturing lines. They will likely be smaller and cheaper, but I doubt they will come close to $25,000.
However, they could come faster on the existing production lines. Tesla is not going as far as confirming that, but it sort of hints at it.
Or it could also be that only the Robotaxi timeline is accelerated.
After all, Musk did announce a sooner-than-expected unveiling of the Robotaxi after canceling the NV9 program.
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