Chief Executive Elon Musk has long promised the introduction of mass-market vehicles, a vision that took a slight detour last year when he canceled plans to produce an all-new $25,000 electric vehicle (EV), as first reported by Reuters. However, anticipation is building this week for a new affordable vehicle that will be based on Tesla's existing manufacturing and design platforms. This shift is a strategic move aimed at making electric cars more accessible to a broader audience.
Over the weekend, Tesla fueled excitement among its fanbase by posting two intriguing clips on X. One video features headlights emerging from darkness, while the other showcases what appears to be a wheel spinning, accompanied by the date "10/7," which follows the U.S. date format for October 7. Despite this buzz, neither Tesla nor social media influencers have confirmed an in-person launch event, diverging from the traditional approach taken during previous Tesla unveilings.
As the launch approaches, analysts, investors, and fans are eager for more information regarding the new vehicle. Major questions revolve around the car's price, driving range, and strategies to reduce manufacturing costs. Late last year, Musk indicated that the vehicle's price would be set below the pivotal threshold of $30,000, which includes U.S. EV tax credits. However, the recent expiration of these credits effectively increased vehicle prices by $7,500, raising concerns about slowing sales for the remainder of the year unless this affordable car can rejuvenate demand.
The demand for affordable electric vehicles is significant. "It's just that people don't have enough money in their bank accounts to buy it," Musk stated during Tesla's second-quarter earnings call in July. He emphasized the need for affordability, highlighting that "the more affordable we can make the car, the better."
Musk initially projected that production of this new vehicle would commence by the end of June. However, by July, Tesla clarified that it had only completed initial builds and expects the vehicle to be available to customers sometime in the last quarter of the year. This delay comes as Tesla faces challenges with slowing sales of its aging product lineup, compounded by increasing competition, particularly in markets like China and Europe. Additionally, Musk's controversial political views have impacted brand loyalty.
Earlier this year, Tesla introduced a refreshed version of the Model Y, incorporating features such as new light bars and a rear touchscreen. As part of a broader strategy, Musk is pivoting the company towards artificial intelligence, with a strong focus on robotaxis and humanoid robots. While Tesla has hinted at launching more affordable vehicles in its lineup, specific details remain scarce. Sources have informed Reuters that the EV manufacturer also plans to introduce a stripped-down version of its Model 3 midsize sedan.
Affordable electric vehicles are crucial for Tesla's ambitious goal of delivering 20 million vehicles within the next decade. This target is one of several operational and valuation milestones set by the company's board, tied to a proposed $1 trillion pay package for Musk. As Tesla navigates the evolving landscape of electric vehicles, the introduction of more budget-friendly options will play a vital role in maintaining its market leadership.
Reporting by Abhirup Roy in San Francisco; editing by Peter Henderson and Richard Chang. For more insights and updates, contact Abhirup Roy at (415) 941-8665 or connect securely via Signal.
