Tesla has been going through some big changes, and now we know why: “Pressure” on EV sales has caused the company to change its product plan.
There are now “more affordable models” in the new, faster plan, which the company says will come out next year. Or, if you believe Tesla CEO Elon Musk, which is a big if because of how bad he is at keeping promises, maybe as early as the end of 2024.
The shocking news sent the company’s stock up more than 11% in trading after the market closed on Tuesday. Even though Musk and other Tesla leaders wouldn’t give investors more information on a call, the price didn’t go down.
All of this happened after Reuters released a shocking story in early April saying that Tesla had stopped working on a cheap, next-generation car. That next-generation car was supposed to be built on the same electric vehicle (EV) base that Tesla is working on for its “robotax” car. Tesla said that this next-generation car might come out as early as the end of 2025.
Musk made a weak claim that Reuters was “lying,” but since then, both Electrek and Bloomberg News have said that the company has slowed down or stopped working on that particular EV. Since then, Musk has said on the social networking site X that Tesla will show off the robotaxi on August 8.
Tesla gave the update in its not-so-great first-quarter earnings report, which showed that revenues dropped 55% year-over-year. As stated in the report, the company had “updated [its] future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025.” The company said that the new cars will include “more affordable models.”
These new products aren’t just made up, though. Tesla says that these cars will be made on production lines that are already in place and will “use parts of” the next-generation platform that the company has been working on “as well as parts of our current platforms.”
Bloomberg News said earlier this week that Tesla was working on new versions of the Model Y and Model 3 that used technology and methods from the next-generation electric vehicle. The Model Y was given the most attention.
Musk’s backers will have to wait before they can find out more.
When asked about Tesla’s new product plan during a call with investors, Musk dodged the question. He said, “We’ll talk about this on August 8th,” which was the date that Tesla planned to show off its robot car, which he called “Cybercab.”
Later in the call, someone asked Musk the same question. Musk replied, “I think we’ve said all we will on that front.”
There was “some risk” with the new platform, according to Tesla VP Lars Moravy. However, Tesla could use “all the subsystems” that were being built for it, such as powertrains, drive units, and improvements in manufacturing and automation, thermal systems, seating, and more. In order to get all of that into new goods as quickly as possible, he said, “that’s what we’re doing.” “That engineering workâwe’re not going to just bury it and forget about it.”
Costs Vs. Growth
The next-generation electric vehicle (EV) is 50% cheaper to make than the base that the Model 3 and Model Y are built on.
The company said on Tuesday that it will lose some of those cost savings when it changes its approach to combine next-generation technology and processes with platforms and production lines that are already in place.
Tesla says that the good thing is growth. The company says it can make twice as many cars by 2025 as it did in 2023 (about 1.8 million). It won’t save as much money on the cars, but it won’t have to build any new factories to make these strange new cars either. Work on a new plant in Mexico has already been slowed down by the company. This is where they had planned to start making the next generation of EVs and robotaxis.
Of course, Tesla has said for years that it wants to reach 50% annual growth over a few years, but it has always missed that goal. The business said it would grow at a “notably lower” rate this year.
Besides that, there are other problems as well. Tesla says it can release these new products even though it fired a lot of workers around the world. Musk, on the other hand, said Tuesday that the company is “not giving up anything significant that I’m aware of.”
For a long time, from 2019 to now, things have been going well, Musk said on the call. It’s time to reorganize the company for the next step of growth. We’ve made some changes along the way.
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