Tesla Scraps Plan To Build an Affordable $25,000 EV, It Doesn't Make Sense

Elon Musk was a lot less bullish than he used to be on an average earnings call, and the most important thing we learned is that Tesla is freezing everything for now. Forget the Roadster, forget the Cybertruck, and, sadly, forget the affordable compact EV we were hoping for. Tesla seems content with the state of affairs right now, expecting to sell a lot more of the already expensive Model Y and pretty much nothing else.

Musk blamed the chip shortage for this bleak perspective, but in fact, he wanted to say that Tesla got the taste of the money and a $25,000 car is no longer appealing. The vehicle market is already at a record high and Tesla raised its vehicles’ prices several times. The Model Y starts now at $60,990 and Tesla is still struggling to fulfill the high demand. Why go for a cheaper vehicle when it already has all the market it can address and then some?

“We’re not currently working on the $25,000 car,” Musk said while answering a question regarding a lower-priced Tesla for mainstream consumers. ”At some point, we will. We have enough on our plate right now. Too much on our plate, frankly.”

This essentially means there will never be a $25,000 Tesla, just like there was never a $35,000 Tesla Model 3. Elon Musk is famous for his “overpromise, underdeliver” approach. Ruling out completely the $25,000 car means it’s dead for good. And he’s right on one thing, too: the market is heading in a direction where we will most likely not see a $25,000 vehicle of any kind soon.

Elon Musk emphasized during the earnings call that Tesla will continue to focus on the products that are the most profitable. These are the Model Y, the Full Self-Driving suite, and, possibly, the Tesla Semi. Tesla will be flooding the market this year with Model Y crossovers coming out of four Gigafactories – Fremont, Austin, Shanghai, and Berlin. So, you see, there are few incentives for a cheaper and, no doubt, less profitable car.