For years now, Tesla has been talking about making cheaper electric vehicles, but inflation and high demand for electric cars have led to prices going up instead.
The automaker has been talking about a next-generation platform enabling a $25,000 electric car in the past. At one point, CEO Elon Musk said that Tesla was aiming to release the cheaper vehicle as soon as 2023.
However, Musk announced that Tesla wasn’t working on the cheaper electric car in 2022 as its focus shifted to the Optimus robot and ramping up Model Y production.
The CEO even suggested that cheaper electric vehicles might not be in Tesla’s plans anymore due to self-driving having a bigger impact on cost per mile.
During the conference call that followed the release of Tesla’s Q3 2022 financial results, Musk confirmed that it is still in the plans and that Tesla has shifted its engineering power to developing the next-generation EV platform that will enable cheaper electric cars:
It’s the primary focus of our new vehicle development team, obviously. At this point, we are done with the engineering for Cybertrucks and for Semi. So, it’s obviously what we’re working on, the next-generation vehicle, which will be probably be about half the cost of the 3 and Y platform. It will be smaller, to be clear.
It sounds like a smaller Tesla vehicle platform that will enable electric cars between $25,000 and $35,000 is in development.
Musk added that this new platform aims to produce more volume than “all of Tesla’s other vehicles combined.”
Obviously, we’re going to take everything we learned from S, X, 3, Y, Cybertruck and Semi into that platform. But we are on a 2-for-1 target. We’re trying to get to that 50% [of cost] number again.
The CEO believes that Tesla’s next-gen vehicle platform is going to be able to produce electric cars for half the cost, labor, and factory space that it takes to produce a Model 3, which currently starts at $47,000.
Glad that we get a confirmation that cheaper electric cars are back in the cards for Tesla, though we should take the cost predictions with a grain of salt since Tesla doesn’t have a great track record on that.
The Model 3 was supposed to start at $35,000, which it only briefly did and that was before the inflation crisis, and the Model S was supposed to start $50,000, which it also briefly did but with a software-locked version that was quickly discontinued.
Therefore, I am not putting that much weight into the cost predictions, but if the goal is cheaper mass production of smaller electric cars, Tesla will certainly end up with a platform that enables smaller and cheaper electric cars, which will increase the EV market.