Tesla has been undergoing major changes, and now we understand why: The company says it’s changing its product roadmap due to “pressure” on electric vehicle sales.
The new accelerated plan now includes “more affordable models” which the company says will launch next year. Or if Tesla CEO Elon Musk is to be believed – and that’s a big bet given his track record on deadlines – perhaps as early as the end of 2024.
The shock announcement sent the company’s shares up more than 11% after hours Tuesday. And the price hasn’t fallen even though Musk and other Tesla executives declined to share more details on a call with investors.
This all follows an explosive report in early April by Reuters that Tesla had abandoned work on a low-cost next-generation car. This next-generation car was supposed 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 arrive as early as the end of 2025.
While Elon Musk vaguely claimed that Reuters was “lying,” Electrek and Bloomberg News have since reported that development of this particular electric vehicle was delayed or underestimated within the company. Musk has since posted on social media site X that Tesla will unveil the robotaxi on August 8.
Tesla provided the update in its lackluster first-quarter earnings report, which showed profits down 55% year over year. The company said in the report that it had “updated (its) future vehicle lineup to accelerate the launch of new models ahead of the previously announced start of production in the second half of 2025.” The lineup of new vehicles includes “more affordable models,” the company said.
However, these new offers are not created from scratch. Tesla says it will build these vehicles on existing production lines and that they will “utilize aspects” of the next-generation platform it has developed, “as well as aspects of our current platforms.”
Bloomberg News reported earlier this week that Tesla was working on new versions of the Model Y and Model 3 that borrowed technology and processes from the next-generation EV, with an emphasis on the Model Y.
Tesla investors will have to wait to find out more.
During a call with investors, Musk addressed the question of 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 called “Cybercab.”
When asked a similar question later in the call, Musk said, “I think we’ve said everything we would do on that front.” »
Tesla Vice President Lars Moravy said there was “some risk” associated with the new platform and that Tesla could exploit “all the subsystems” developed for it, such as groups powerplants, drive units, as well as manufacturing and automation improvements, thermal systems, seats, and more. “All of this is transferable, and that’s what we’re doing: trying to integrate it into new products as quickly as possible,” he said. “This engineering work, we’re not just trying to throw it away and put it in a coffin.”
Cost vs. Growth
Tesla has worked to reduce the manufacturing cost of the next-generation electric vehicle by 50% compared to the platform that underpins the Model 3 and Model Y.
The company admitted Tuesday that by adopting a strategy of blending next-generation technology and processes with existing platforms and manufacturing lines, it would lose some of those cost savings.
The advantage, according to Tesla, is growth. The company says it can double 2023 production (which was about 1.8 million vehicles) by 2025. And while it won’t save as much on the cost of cars, it won’t have no need to build new production lines to make these mysterious cars either. new vehicles. The company has already slowed work on a new factory in Mexico, where it had originally planned to begin building the next generation of electric vehicles and robotaxi.
Of course, Tesla has said for years that it expected to achieve 50% annual growth, averaged over a few years, and has consistently missed that goal. As the company warned, its growth will be “significantly weaker” this year.
There are other challenges as well. Tesla claims it can launch this new product line after cutting a large number of employees from its global workforce – although Musk said Tuesday the company is “not giving up anything major that I know of.”
“We 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.”
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