Tesla is planning to have what CEO Elon Musk describes as an affordable battery-electric vehicle on the market early next year, but it will use the company’s existing plants rather than any new factory the BEV maker eventually could build in Mexico.
During a conference call with analysts, Musk says the company plans to build “affordable models” that incorporate pieces of a next-generation platform on the production lines in the company’s existing factories in China; Germany; Fremont, CA; and Austin, TX.
Musk (pictured, below left) did not specify whether those models actually would hit the $25,000 price point he had discussed during earlier conference calls. But he says the new BEVs should be ready to roll off Tesla’s existing assembly lines late this year or in early 2025.
Musk’s statements on a potential entry-level-priced EV contradict a Reuters report last month that the company abandoned such plans. The Reuters report cited emails from engineering managers who told staff that the project was scuttled. Musk rebuffed the report on his social media platform, X.
“We have updated our future vehicle lineup to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025,” says Musk, who is facing questions about Tesla’s plans after production and sales failed to meet expectations in the first quarter.
Tesla’s Q1 financial numbers also were disappointing as revenues from the company’s automotive operations dropped 13%. The decline was offset by increases in revenue from Tesla’s storage-battery business and from services such as its BEV charging business.
Operating expenses increased 37% year-over-year, but operating income dropped 56% and its margins fell by half. Additionally, its cash flow in the first quarter turned negative.
The new models in Tesla’s pipeline, however, are “not contingent on any massive new factory,” Musk notes, and should allow the company to boost production by 50% to 3 million units annually despite the pressure on BEV sales globally.
According to Musk, Tesla navigated “several unforeseen challenges” in Q1, including the sabotage toppling of an electric tower near its gigafactory outside Berlin (pictured, below) and conflict in the Middle East disrupting shipping through the Red Sea. Tesla also ramped up production of the updated Model 3 in Fremont and the Cybertruck in Austin.
Electric tower at Tesla’s Gigafactory near Berlin undergoes repairs after being toppled by left-wing activists in March.
“We should do much better in the second quarter,” Musk says, noting prices of critical minerals used in battery production have dropped significantly.
Musk adds Tesla is well ahead of rivals in putting autonomous vehicles on the road. Full Self Driving or FSD, Tesla’s controversial semiautonomous driving feature, is being constantly improved and updated, he says.
At least one other manufacturer is interested in adopting Tesla’s FSD system, which relies only on cameras and “digital neural networkers” that work on a computer rather than radar and lidar, the CEO says.
Tesla also is reducing the price of FSD, which has been pushed out to 1.8 million vehicles. Additionally, Tesla will be introducing a robo-taxi in August, Musk says.
“We’re super excited about our autonomy road map. We’re really headed for an electric and autonomous future.” Driving an ICE vehicle without autonomy will soon become the equivalent of “riding a horse and using a flip phone,” he says.
In the future, using an autonomous vehicle will become as common as using an elevator: “You’ll just call one on your phone, use it and leave. You won’t even think about it,” Musk says.
Musk also emphasizes Tesla is continuing to plan and invest for future growth.
“While many are pulling back on their investments, we are investing in future growth – including our AI infrastructure, production capacity, our Supercharger and service networks and new products infrastructure – with $2.8 billion of capital expenditures in the first quarter,” he says.
Musk also says he remains committed to Tesla despite his other interests such as the social media platform X and SpaceX. “Tesla continues to take up the majority of my work time, and I work all the time except for maybe Sunday afternoon. I am going to make sure Tesla is prosperous.”
