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Elon Musk explains why 'Tesla isn't working on a $25,000 car'

Engineering

If you're expecting a super-cheap new Tesla, you're out of luck

Elon Musk explains why 'Tesla isn't working on a $25,000 car'

When Tesla first announced the Model 3, its main selling point was its estimated starting price of $35,000. Information soon surfaced about a possible Model 2 (or something like that) that would sell for the even more unlikely price of $25,000. On Wednesday, during Tesla's fourth-quarter earnings report, CEO Elon Musk finally denied these rumors.

“We are not currently working on this $25,000 machine. We will someday. We have enough to do now, frankly, too much. So at some point they will, but I think it's kind of a question, it's just the wrong question."

The central theme was that Tesla is still heavily constrained by global supply chain issues and chip shortages. This is what prevented the company from launching any new models in 2021 and remains an obstacle in 2022. Considering that Tesla can't start producing cars that were announced a few years ago, it would be crazy to work on a car that is likely to have a much lower profit margin.

Tesla fans have been eager to hear about the ramp-up of capacity at the company's new Texas-headquartered Austin and Berlin plants, as well as the release dates for previously promised models such as the Cybertruck and the much-touted entry-level vehicle dubbed the Model 2 .

Instead, CEO Elon Musk spent an hour making new promises about robotaxis ("Tesla's most important source of profitability") and the humanoid the company unveiled in August, which "may eventually become more significant than the car business."

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Tesla still dominates the EV industry in terms of sales volumes, with the Model 3 being the best-selling vehicle in every market (except China, where it is second only to a microcar).

Tesla shares tumbled into bearish territory on Thursday, falling more than 20% in 2022, missing out on a magical $1 trillion market valuation as frustrated investors slashed the value of the electric vehicle pioneer's stock.


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