Tesla Could Cut Production Costs By Half, Igniting Rumors Of Cheaper Tesla Model

Tesla Could Cut Production Costs By Half, Igniting Rumors Of Cheaper Tesla Model

During Tesla’s latest earnings call, Elon Musk said that the EV maker is working on a new platform that could slash its production costs by half. This cheaper platform would be the company’s third, and it’s stoking rumours about the long-forgotten $US25,000 Tesla, anecdotally known as the Tesla Model 2, according to Automotive News.

Musk previously dismissed future plans for a Tesla EV that would come in at a lower price; partly because EVs are getting more expensive to make as raw materials become more and more valuable (read: costly). And partly because there’s no way a major automaker (certainly not Tesla) is going to lower the price of its electric vehicles altruistically — despite Musk insisting that electric cars would get cheaper over time as production and infrastructure scaled.

Tesla Could Cut Production Costs By Half, Igniting Rumors Of Cheaper Tesla Model
Photo: Justin Sullivan, Getty Images

But now that Musk is talking about a cheaper platform again, the industry is back to speculating about what it means. On October 19, Musk said, “We don’t know the exact dates, but this is the primary focus of our new vehicle development team,” referring to the alleged 50 per cent-off EV platform, which would cut costs relative to the one Tesla uses to make the Model 3 and Model Y. The Tesla CEO went on, saying this cheaper platform would be used for a new EV that’d eventually “exceed the volume of all other Tesla vehicles combined.”

One of the speculations going back and forth would be a cheaper Tesla or a new EV that will be used to build a fleet of autonomous vehicles not meant for individual owners, but as robotaxis. That much tracks with comments Musk made earlier about a Tesla robotaxi that would not have any controls for driver input, and which would go into production in 2024. A stripped down Tesla meant for fleets is a good candidate for a car that must come in at a lower production price.

But in a rare moment of snap realisation — well, I would hope — auto industry analysts and the Tesla faithful admitted that Tesla’s own habit of overestimating its production schedule and its EV’s abilities could mean this new cheaper Tesla model might end up not having the capabilities needed to be a working robotaxi and could force Elon Musk to turn the project into the rumoured $US25,000 Tesla.

As if. I think what people are missing here is that Musk has little incentive to lower the prices of Tesla’s cars. It’s not like the company has a problem with demand, right? People are fixating on the so-called cheaper platform, but a new platform thats costs Tesla less, doesn’t suddenly become a new EV that costs less for everyone, including buyers — especially not buyers. I’m going to treat this like the Tesla Cybertruck: I’ll believe there’s a $US25,000 Tesla when I see it.

Tesla Could Cut Production Costs By Half, Igniting Rumors Of Cheaper Tesla Model
Photo: Frederic J. Brown/AFP, Getty Images

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