A Brief History of Tesla’s Cheap Electric Car That Is (Reportedly) Dead

A Brief History of Tesla’s Cheap Electric Car That Is (Reportedly) Dead
Contributor: Steve DaSilva and Zachariah Kelly

Another year, another slew of articles about the ‘cheap’ Tesla, so where are we at with this mythical EV?

Tesla has been promising an affordable mass-market EV for years. First, it was a vague $US30,000 (about $45,684) concept, then the mythical $US35,000 (about $53,298) Model 3, and then the $US25,000 (about $38,070) model without a steering wheel or pedals.

The affordable Tesla has been a no-show at Tesla’s events for years. A cheaper upcoming model was briefly mentioned at Tesla’s 2023 Investor Day event, as it was predicted to be revealed on the day, but nothing solid was locked in.

But recently, a report from Reuters indicated that the car was dead in development, and that Tesla would refocus instead on its robotaxi. Elon Musk has denied the report, but has confirmed that the robotaxi will be revealed later this year. This all followed Reuters’ report in 2023 that Tesla was beginning to develop a 25,000 euro EV at its Berlin factory.

With the exception of the entry-level Model 3’s incredibly brief run, Tesla doesn’t exactly seem eager to follow through on any of these budget-minded promises. Why not? Where is the mythical ‘Tesla Model 2’?

Here’s a timeline of its past.

A brief history of the ‘cheap’ Tesla

Back in 2009, the only Tesla car to be found on actual roads was the original (and recently introduced) Roadster, built using a chassis provided by Lotus. A prototype of the Model S had been revealed, but the final version wouldn’t reach customers for another three years. The Models X, 3, and Y were but a glimmer in the eye of a certain emerald enthusiast. Tesla was a tiny, niche automaker.

Yet, even in those early days, Elon Musk wanted to sell a cheap car. In fact, he announced plans for a cheap car: A starting price of $US30,000 ($45,684), and a starting year of 2016. Maybe even 2015, if the tides were right and everything went well.

A Brief History of Tesla’s Cheap Electric Car That Is (Reportedly) Dead
The Model S prototype was revealed in 2009. Remember that fake grille they used to have? (Photo: El monty, Public domain, via Wikimedia Commons)

In 2012, Musk and Tesla were still talking about that $US30,000 ($41,646) car. It was supposed to launch just three years later, alongside the production version of the Model X. 2013 rolled by, and talk of the yet to materialise EV didn’t stop.

By 2014, that entry-level sedan had gained a name: the Model 3, which has become the staple entry-level Tesla. With the announcement, its price point was bumped up to the famed $US35,000 ($53,298) MSRP that grabbed so many headlines. Maybe Tesla was just accounting for inflation since that initial 2009 announcement, or maybe the cost of batteries hadn’t come down as far as Musk expected.

Surely, though, after all those years of talking about a budget model, the new car would actually exist at that price point. After the company took in hundreds of thousands of preorders, each with a hefty price tag, there’s no way it could turn around and barely offer the car everyone ordered. Right?

Sort of. In 2019, the widely available model of the car turned out to be a bit more expensive, starting at $65,000 in Australia, while the cheap $US35,000 model was only available in limited quantities in the U.S. (meaning that most drivers would have to gravitate to the more expensive models).

In 2020, the $35,000 Model 3 was cancelled entirely. It was nice while it lasted, I suppose.

Two years later, in 2022, Elon Musk said on an earnings call that Tesla was not working on a $US25,000 car now, but would at some point.

In 2023, we were back to talking about the rumoured ‘cheap’ Tesla, with it being loosely dubbed the ‘Tesla Model 2’ by observers and analysts. Leading up to March 2023, analysts left and right said that the cheaper car would be coming soon, and potentially revealed at the Investor Day event… But of course, that never happened. In November 2023, a source familiar with the matter told Reuters that Tesla plans to build the car in Berlin, but didn’t elaborate on when.

Forbes contributor wrote that, according to a chart shown at the 2023 investor event, the ‘cheaper’ Tesla would cost only 71 per cent of the Model 3’s price, but obviously like with all things Tesla, take it with a grain of salt.

But all of this would seemingly be for nothing, as Reuters reported in April 2024 that the cheap EV was being scrapped, and production would be refocused toward the robotaxi.

Tesla’s record with promising budget models is a lot stronger than its record for actually delivering them. So when the company announces a $US25,000 ($38,068) budget model only to say it isn’t actually going to be built, it’s hard to be disappointed.

This isn’t to say that Tesla won’t ever make a cheap car, but for the moment, it’s probably not a priority. After all, Tesla’s Model 3 and Model Y remain the best-selling electric vehicles in Australia and other markets, although while they’re leading numbers on adoption, several competitors are undercutting that price point.

Heck, with the number of price drops Teslas have gotten over the past two years, maybe the Model 3 will end up being the ‘cheap’ model after all.

If you’re interested in buying an EV in Australia, here’s what incentives apply to you. Additionally, here’s what is available and what’s coming.

Image: Tesla

Want more Aussie car news? Here’s every EV we’ve reviewed in the last two years, all the EVs we can expect down under soon, and our guide to finding EV chargers across the country. Check out our dedicated Cars tab for more.

This article has been updated since it was originally published.

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