Despite Elon Musk's vehement denial of Tesla's (TSLA) reported departure from the pursuit of a more affordable car, one key figurehead is not a fan of the direction the EV automaker is headed.
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During a recent interview at HSBC's inaugural Global Investment Summit in Hong Kong on April 2, Tesla co-founder and former CEO Martin Eberhard said that the recent news of the company snapping plans for a cheaper EV was "a shame," noting that it may do better than other products it currently offers.
“I read recently that Tesla has decided not to pursue their Model 2, their low-end car, because they don’t think they can compete with the low-end Chinese cars,” Eberhard told Bloomberg TV's Haslinda Amin. “That’s a shame, they might want to rethink that. It seems like a better market than that gigantic truck they make.”
In the same interview, he said that he was surprised that Toyota (TM) was "late to the EV game," and that he had been "watching BYD (BYDDY) for decades."
Tesla calls off cheaper model
Reuters reported on April 5 that Tesla called off plans for a cheaper EV, which would have been dubbed the Model 2. Citing three unnamed sources familiar with the decision, as well as internal company documents, the decision to swap the sub-$25,000 model came in February 2024.
In response to the report, CEO Elon Musk wrote in a post on X (formerly known as Twitter) that "Reuters is lying (again)."
Reuters is lying (again)
— Elon Musk (@elonmusk) April 5, 2024
Stay tuned for lower-priced Tesla
At a Q&A at the Petersen Automotive Museum in Los Angeles on April 7, Tesla design boss Franz von Holzhausen told an attendee to "stay tuned," and echoed a bit of Musk's sentiment when asked about the sub-$25,000 project.
“I would just say stay tuned,” von Holzhausen replied. “Just don’t always believe what you read.”
Franz @woodhaus2 on the new rumored $25,000 future Tesla pic.twitter.com/eAK7u3wxUI
— Zack (@BLKMDL3) April 7, 2024
The decision, nonetheless, represents a departure from a core ethos that Elon Musk expressed ever since the company was planning on making electric Roadsters.
In a 2006 blog post on Tesla's website titled "The Secret Tesla Motors Master Plan (just between you and me)," the Tesla CEO laid out the game plan for what he saw as his utltimate goal — affordable electric "family cars."
"Without giving away too much, I can say that the second model will be a sporty four door family car at roughly half the $89k price point of the Tesla Roadster and the third model will be even more affordable," Musk said in his 2006 blog post. "In keeping with a fast growing technology company, all free cash flow is plowed back into R&D to drive down the costs and bring the follow on products to market as fast as possible.
"When someone buys the Tesla Roadster sports car, they are actually helping pay for development of the low cost family car."
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In December 2023, Musk talked about some of the work that Tesla was doing to achieve a lower-cost EV.
"We are working on a low cost electric vehicle that will be made at very high volume. We're quite far advanced in that work," Musk told Sandy Munro of Munro & Associates. "I view the production line plans for that every week and I think the revolution in manufacturing that will be represented by that car will blow people's minds."
"It's not like any car production line that anyone's ever seen," he added.
Currently, BYD is the highlight of the Chinese automakers leading the conversation when it comes to 'cheap EVs.' While Tesla's cheapest model — the recently redesigned Model 3 sedan, has a retail price of $38,990, BYD's compact Dolphin hatchback sets Chinese consumers back the equivalent of less than $14,000.
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