Elon Musk Reassesses Tesla's $25,000 Vehicle Strategy
Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk recently changed his stance on producing a $25,000 electric vehicle (EV) for human drivers, stating that the idea is "meaningless" unless the vehicle is fully autonomous. This comment followed a previous report on April 5 that Tesla has abandoned its plans for a new affordable mass-market EV in favor of focusing on a self-driving robotaxi.
During an earnings call on October 23, in response to an investor's question about when Tesla would launch a $25,000 "non-robotaxi" model, Musk interrupted, stating that a regular car at this price point would be "ridiculous." He emphasized that Tesla's future $25,000 vehicle would be a two-door, two-seater called "Cybercab," optimized for full autonomy and without a steering wheel or pedals.
Musk introduced a prototype of the Cybercab at an event on October 10, announcing that production would begin in 2026. This will occur after the deployment of fully autonomous versions of Tesla's current Model 3 and Model Y in Texas and California next year. However, Tesla faces significant technological, regulatory, and legal hurdles to achieve the full vehicle autonomy that Musk has promoted for nearly a decade.
Tesla’s initial strategy aimed to become the world's largest automaker by producing 20 million vehicles annually by 2030, but this target was removed from the company's latest sustainability report. In January, Musk confirmed plans for a new, affordable EV expected in 2025, indicating that it would create a second "wave of growth" for the company. However, by April, the narrative shifted as Tesla considered more affordable models that could be produced using existing production lines.
Morningstar Research Services analyst Seth Goldstein suggested that instead of developing a new platform for a more affordable vehicle, Tesla could potentially produce cheaper cars priced in the mid-$30,000 range based on existing platforms.
Following reports in April about the purported cancellation of the "Model 2," Musk stated in August that a robotaxi would be unveiled, but this was postponed to October. A subsequent event, which included a "Robovan" concept and humanoid robots, led investors to seek more details, resulting in a 9% drop in Tesla's shares the following day.
The market for the Cybercab remains uncertain; the sports car design and limited passenger and luggage space raise questions among analysts. Tesla has not provided details on whether the Cybercab will include new self-driving technology beyond the current "Full Self-Driving" feature, which still requires a cautious human driver.
During the earnings call in October, Musk assured that despite lacking traditional driving controls, the Cybercab would be priced around $25,000. Tesla did not respond to requests for comment regarding these developments.