Musk has made plenty of noise in recent years about introducing a US$25,000 (A$38,000) EV, first making the bold claim in September 2023 that we’d get one by 2023.
As with most Tesla announcements, this date came and went with no sign of a product, which last year culminated in the outspoken executive telling shareholders such a vehicle “is pointless” and “completely at odds with what we believe”.
While many expected Musk to stay true to his word and continue backing an autonomous future for Tesla – which has happened in part with the new Robotaxi – the CEO yesterday revealed an affordable EV is still on the cards.
However, rather than being a standalone model – long rumoured to be named the Model 2, and previously expected to be twinned with the two-seat Robotaxi – Musk said the new affordable EV is “just a Model Y”.
This is perhaps unsurprising, not only due to the popularity of the Model Y electric SUV and its related Model 3 sedan, but also on a cost basis to use an existing platform to reduce the financial impact of developing new underpinnings.
In the case of the latter factor, Tesla announced its largest quarterly financial decline in more than a decade yesterday, posting a profit of US$1.2 billion (A$1.8 billion), a decrease 14.3 per cent compared to the same three-month period last year.
Likewise, its revenue fell by 12 per cent from US$25.5 billion (US$38.7 billion) to US$22.5 (A$34.2 billion).
It’s not yet clear how Tesla will make the Model Y more affordable, though reducing the size of its battery or changing the battery chemistry to a cheaper option could be a solution.
Tesla’s decision to base its affordable EV on the Model Y comes after US President Donald Trump repealed the nation’s US$7500 (A$11,400) federal tax credit for battery-powered cars, impacting Tesla which has long been the best-selling brand.
The EV specialist is also set to lose revenue from selling emissions credits to other manufacturers. While previously its electric-only lineup allowed it to sell credits to brands which were not meeting emissions targets, President Trump repealed these penalties, removing the need for carmakers to buy or sell credits.
Ironically, Tesla’s affordable EV announcement also comes shortly after its Chinese division released a larger, seven-seat Model Y, designed to fit more passengers in comfort.
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