Tesla Is Still Working on a Low-Cost EV, but It's Not the $25,000 Car

It may not be the Model 2, but it should be cheaper than the Model 3.

Tesla's Gigafactory assembly line in Texas

It’s been a rollercoaster trying to follow the journey of Tesla’s $25,000 EV, and the company’s latest earnings call has thrown us for another loop.

During Tesla’s first-quarter earnings call for 2024, Elon Musk explained that Tesla has accelerated the launch of its future vehicle lineup, which includes “more affordable models.” That may sound like he’s referencing the $25,000 model that was recently scrapped, but on closer inspection, we don’t think it will be. After all, an initial Reuters report and then one from Electrek corroborate that Musk had tabled this mass-produced, affordable EV.

Instead, Tesla may be shifting towards a more affordable version of one of its existing EVs. If we take a closer look at Musk’s explanation, it’s more likely we’re looking at an EV that’s a watered-down version of the Model 3.

Tesla may redesign the Model 3 for a more affordable version.


Model 3 Lite?

To get a better idea of what these affordable models could be, we should read between the lines of what Musk said during the earnings call.

“These new vehicles, including more affordable models, will use aspects of the next-generation platform, as well as aspects of our current platform, and will be able to be produced on the same manufacturing lines as our current vehicle lineup,” Musk said during the earnings call. The Tesla CEO added that these new models won’t require any new factories or production lines.

Compare these plans for a more affordable EV to Tesla’s plans for its robotaxi. In a letter sent to shareholders accompanying the first quarter financial results, Tesla mentions its “purpose-built robotaxi product will continue to pursue a revolutionary “unboxed” manufacturing strategy.”

A New Way to Manufacture Teslas

For those unfamiliar, Tesla’s unboxed approach is a simplified manufacturing process that should cut down on costs and time. When the $25,000 EV was still on the menu, it was rumored that Tesla would use this new manufacturing approach to get it down to that starting price. However, it seems that Tesla is reserving its unboxed strategy for its robotaxi EV, while its upcoming affordable models will stick to the existing approach.

Considering all of that, we doubt Tesla can justify getting an EV’s final cost down to anywhere near $25,000 using its current manufacturing process. Instead, Tesla could offer a trimmed-down version of an existing EV, like the Model 3, that comes with a smaller battery, fewer interior features, or even limited software, like no Full Self Driving.

We could see the most affordable Tesla yet sometime next year.


Pushing Up Production Times

There might be an upside, though. This upcoming affordable Tesla could come out much quicker than usual. Since Tesla plans to use the existing manufacturing methods and systems, there shouldn’t be as many manufacturing issues when compared to releasing a completely new EV. Musk even noted during the earnings call that production for its future EVs has been bumped up ahead of schedule.

“We’ve updated our future vehicle lineup to accelerate the launch of new models ahead of previously mentioned start of production in the second half of 2025,” Musk said. “So we expect it to be more like early 2025 if not late this year.”

Even though the dream of a $25,000 Tesla is shelved, at least Tesla is still trying to make an EV that’s more affordable. Now we just wait and see if Tesla can deliver.

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