Tesla has undergone some major changes, and now we have a sense of why: The company says it’s flipping its product roadmap due to “pressure” on EV sales.
The new and accelerated plan now includes “more affordable models” that the company claims will be released next year. Or if Tesla CEO Elon Musk is to be believed — and that’s a big bet given his track record with schedules — possibly as early as late 2024.
The shock announcement sent the company’s stock up more than 11% in after-hours trading on Tuesday. And the price didn’t drop even as Musk and other Tesla executives declined to share more details on a call with investors.
All these come after a bomb report in early April by Reuters which claimed that Tesla had abandoned work on a low-cost next-generation car. This next-generation car was to be built on the same EV platform that Tesla is developing for its supposed robotaxi vehicle. Tesla had said that this next-generation car could come as early as late 2025.
While Musk casually claimed Reuters was “lying,” both Electrek and Bloomberg News they have since reported that development of that particular EV has been delayed or priced in-house. Musk has since posted on social media site X that Tesla will unveil the robotaxi on August 8.
Tesla provided the update in its first-quarter earnings report, which showed profits fell 55% year over year. The company said in the report that it had been “informed [its] future range of vehicles to accelerate the launch of new models ahead of the previously announced start of production in the second half of 2025.” The slate of new vehicles includes “more affordable models,” the company said.
However, these new offerings are not spun from whole cloth. Tesla says it will build these vehicles on existing production lines and that they will “use aspects” of the next-generation platform it has developed, “as well as aspects of our current platforms.”
Bloomberg News reported earlier this week what Tesla was working on new versions of the Model Y and Model 3; which borrowed technology and processes from the next-generation EV, with an emphasis on the Y model.
Tesla investors will have to wait to learn more.
On a call with investors, Musk questioned what Tesla’s new product roadmap actually entails. “We’ll talk about it on August 8,” he said, referring to the event Tesla has planned to unveil its robotaxi, which it has dubbed the “Cybercab.”
When asked a similar question later in the call, Musk said “I think we’ve said everything we can on that front.”
Tesla vice president Lars Moravy said there is “some risk” associated with the new platform and that Tesla could leverage “all the subsystems” being developed for it, such as engines, powertrains, as well as improvements in construction and automation, thermal systems. seats’ and more. “All of that is transferable, and that’s what we’re doing — trying to get it into new products as quickly as possible,” he said. “This engineering project — we’re not just trying to throw it away and put it in a coffin.”
Cost vs development
Tesla has worked to reduce the cost of manufacturing the next-generation EV by 50% compared to the platform that underpins the Model 3 and Model Y.
The company acknowledged Tuesday that by moving to a strategy of blending next-generation technology and processes with existing platforms and production lines, it will lose some of those cost savings.
The upside, according to Tesla, is growth. The company claims it can double its 2023 production (which was about 1.8 million vehicles) by 2025. And while it won’t save as much on car costs, it also won’t need to build new production lines to do so. the mysterious new vehicles. The company has already slowed work on a new factory in Mexico, where it originally planned to start building its next-generation EV and robotaxi.
Of course, Tesla has said for years that it expected to reach 50% annual growth, averaged over a few years, and has consistently missed that goal. As the company warned, it will grow at a “significantly lower” rate this year.
There are other challenges. Tesla claims it can launch this new product line after laying off a huge number of employees from its global workforce – although Musk said on Tuesday the company is “not giving up anything significant that I know of”.
“We’ve just had a long period of prosperity from 2019 to now,” Musk said on the call. “We’ve made some fixes along the way, but it’s time to reorganize the company for the next phase of growth.”
