Photo: @bradsferguson via X, Tesla
Although April 1 has passed a while ago, some people still surprise us with nonsense. Reuters, for instance, claimed it found from credible sources that Tesla scrapped the plans to build an affordable EV on the next-generation EV platform. Elon Musk denied the report, saying, "Reuters is lying (again)."
Tesla has so far stuck to Elon Musk's Master Plans, following the company's mission to bring affordable electric vehicles to the masses. To reach that point, Tesla followed a stepped approach, starting with luxury EVs and expanding its market from there with more affordable EVs. However, a truly affordable electric vehicle from Tesla is still not on the market, even though other carmakers, mostly from China, are already producing affordable EVs.
Tesla ditched the plans to build a $25,000 EV in 2022 when the post-pandemic shock ground supply chains to a halt and raised car prices through the roof. The affordable EV made a surprising comeback in 2023 after demand for existing Tesla models suddenly evaporated, forcing Tesla to cut prices. Tesla started the development of its most affordable model with big plans, including a new manufacturing process that would cut production costs in half.
These plans have changed a few times, first by moving initial production from Mexico to Texas and later by setting up plans for several gigafactories around the world to produce the compact EV at scale. However, if a Reuters report is true, they may have changed again. Worse than that, Reuters claims that Tesla scrapped the affordable EV plans completely. Instead, the EV maker will focus on developing the robotaxi model that shares the Gen-3 platform with the $25,000 EV.
The publication cites several anonymous sources, including internal communication that confirms the mass-market EV, known internally as NV91 and externally as H422, is dead. "Suppliers should halt all further activities related to H422/NV91," read one message, while another from a manager thanked their employees "for their hard work and dedication."
Within minutes of the report's publication, Tesla's share prices dropped by more than 5%. Elon Musk denied the report about 15 minutes later, saying, "Reuters is lying (again)." Immediately, the stock bounced back, a roller coaster move that made some people accuse Reuters of market manipulation. After all, scrapping the affordable EV plans doesn't make sense.
To be fair, this is not the first time Musk postponed the $25,000 EV development. He also indicated in the past that the robotaxi is his dream project. However, as Walter Isaacson showed in his book about Elon Musk, the Tesla CEO was talked into building the compact EV in addition to the robotaxi. This ensured that the latter was viable and economically feasible. After all, without the volumes of an affordable EV, the development costs for the robotaxi would've been insane.
Even though Tesla Full Self-Driving has made a breakthrough, Tesla would find it almost impossible to sell its robotaxis outside North America. Local regulations, especially in Europe, make autonomous vehicles nearly impossible to certify. If Tesla wants to develop a new car model for the low volumes afforded by the American market, the company is really in trouble. The demand for the current lineup seems to have peaked, and the Gen-3 EVs were considered the cure that would've allowed Tesla to grow again.
Hopefully, this would prove just a hoax or an April Fool's joke that Reuters reporters discovered too late in a drawer. Production of the next-generation EVs was planned to start in the second half of 2025 at Giga Austin in Texas. Last year, Tesla notified suppliers to prepare for an initial production of 10,000 units per week. Canceling everything one year before production would not make much sense that late in the game, especially as Tesla desperately needs this model.
Tesla ditched the plans to build a $25,000 EV in 2022 when the post-pandemic shock ground supply chains to a halt and raised car prices through the roof. The affordable EV made a surprising comeback in 2023 after demand for existing Tesla models suddenly evaporated, forcing Tesla to cut prices. Tesla started the development of its most affordable model with big plans, including a new manufacturing process that would cut production costs in half.
These plans have changed a few times, first by moving initial production from Mexico to Texas and later by setting up plans for several gigafactories around the world to produce the compact EV at scale. However, if a Reuters report is true, they may have changed again. Worse than that, Reuters claims that Tesla scrapped the affordable EV plans completely. Instead, the EV maker will focus on developing the robotaxi model that shares the Gen-3 platform with the $25,000 EV.
The publication cites several anonymous sources, including internal communication that confirms the mass-market EV, known internally as NV91 and externally as H422, is dead. "Suppliers should halt all further activities related to H422/NV91," read one message, while another from a manager thanked their employees "for their hard work and dedication."
Within minutes of the report's publication, Tesla's share prices dropped by more than 5%. Elon Musk denied the report about 15 minutes later, saying, "Reuters is lying (again)." Immediately, the stock bounced back, a roller coaster move that made some people accuse Reuters of market manipulation. After all, scrapping the affordable EV plans doesn't make sense.
To be fair, this is not the first time Musk postponed the $25,000 EV development. He also indicated in the past that the robotaxi is his dream project. However, as Walter Isaacson showed in his book about Elon Musk, the Tesla CEO was talked into building the compact EV in addition to the robotaxi. This ensured that the latter was viable and economically feasible. After all, without the volumes of an affordable EV, the development costs for the robotaxi would've been insane.
Even though Tesla Full Self-Driving has made a breakthrough, Tesla would find it almost impossible to sell its robotaxis outside North America. Local regulations, especially in Europe, make autonomous vehicles nearly impossible to certify. If Tesla wants to develop a new car model for the low volumes afforded by the American market, the company is really in trouble. The demand for the current lineup seems to have peaked, and the Gen-3 EVs were considered the cure that would've allowed Tesla to grow again.
Hopefully, this would prove just a hoax or an April Fool's joke that Reuters reporters discovered too late in a drawer. Production of the next-generation EVs was planned to start in the second half of 2025 at Giga Austin in Texas. Last year, Tesla notified suppliers to prepare for an initial production of 10,000 units per week. Canceling everything one year before production would not make much sense that late in the game, especially as Tesla desperately needs this model.
Reuters is lying (again)
— Elon Musk (@elonmusk) April 5, 2024
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