Tesla, like all carmakers, is still addicted to expensive electric vehicles.
CEO Elon Musk began talking about a cheap, affordable car eons ago in the first Master Plan in 2006 and has reiterated this over the years, referring specifically to a $25K vehicle. But conveniently omitted any mention in the latest 2023 Master Plan.
A new book claims that executives convinced Musk to build a Cybertruck-esque $25K car alongside a robotaxi. I believe the robotaxi is coming but have my doubts about the production of a $25K Tesla. The 19th century American impresario PT Barnum had something to say about that.
Tesla is too focused on the Cybertruck (which is real but will not be cheap) and ramping up production of the refreshed Model 3 to worry about an affordable car.
The refreshed Tesla Model 3 is less affordable today
While Tesla zealots on Twitter/X might think a $40K Model 3 is cheap, the other 95 percent of America doesn’t.
Many (including me) were expecting Tesla to lower the price of the refreshed Model 3 “Highland” as a result of cost-cutting. But the price has actually increased (Wall Street loves this, btw.)
But, wait, that $25K Tesla is coming, Tesla boosters say. They often point to the Austin Gigafactory, where Tesla is developing new processes, equipment and tooling to build better cars more efficiently.
That’s true. But just don’t expect this to be applied to a $25K car anytime soon.
As Edmunds news editor Will Kaufman told me this week, yes, Tesla is stepping up its relentless pursuit of cost cutting. But that doesn’t necessarily translate to cheaper cars. The goal is to make money, after all.
To lower prices, Tesla now leans on federal tax credits and state rebates in the U.S. (otherwise known as a government discount.) Problem is, government incentives aren’t permanent, aren’t consistent from state to state, and come and go like the seasons.
On the other hand, there are authentically inexpensive EVs like the Chevy Bolt. That popular hatchback starts at under $30K and is eligible for the same tax credits and rebates that the Model 3 is.
Aren’t convinced and still believe in a $25K Tesla after all these years? Fine. Meanwhile in the real world car buyers across the world will take out a car loan and flock to the $40K Model 3 or the coming (and pricier) Model Y refresh.
(Note: The combined tax credit and state rebate potentially amounts to $15,000 in California.)