Tesla accelerates production of more affordable electric cars

New EV models will arrive soon, confirms company boss Elon Musk, promising more information on 8 August

Tesla has reignited speculation that it will launch an affordable electric car, following reports that plans for an entry-level Tesla Model 2 had been scrapped.

Speaking on the company’s first-quarter earnings call, boss Elon Musk suggested that more on the subject would be announced on 8 August this year. 

Musk revealed no further details on the small EV but said Tesla had “accelerated the launch of new models ahead of the previously mentioned start of production in the second half 2025”. That means we could see a new Tesla at the end of 2024 or early in 2025. 

“These new vehicles, including more affordable models, will use aspects of the next-generation platform as well as aspects of our current platforms and will be able to be produced on the same manufacturing lines as our current vehicle line-up,” said Musk. 

Musk added that the American company would aim to produce more than three million vehicles. Despite this target, Tesla recorded a significant drop in profit year on year. 

It accrued a sum of $1.13 billion, down by 55% on $2.51bn in quarter one of 2023. Revenues came in at $21.3bn, down on the $22bn predicted by analysts. 

Tesla also confirmed it would reduce its headcount by more than 10% to “prepare the company for the next phase of growth” and save “in excess of $1bn on an annual run rate basis”.

Musk said the company had “navigated several unforeseen challenges”, such as disruption at its Fremont and Berlin factories, as well as “seasonal factors”.

However, he also said the EV market was taking a hit worldwide, with other companies backtracking on plans to fully electrify. 

“The EV adoption rate globally is under pressure and a lot of other auto manufacturers are pulling back on EVs and adopting plug-in hybrids instead,” said Musk. “We believe this is not the right strategy and that electric vehicles will ultimately dominate the market.” 

Despite the implications of a new affordable model, it’s clear from the earnings call that Tesla is well invested and focused on autonomous robotaxis. “We will be showcasing our purpose-built robotaxi or cybercab in August,” said Musk. 

The Tesla robotaxi will major on ride-sharing and will hit the road without driving pedals or a steering wheel. 

“The way to think of Tesla is almost entirely in terms of solving autonomy and being able to turn on that autonomy for a gigantic fleet,” said Musk. “I think it might be the biggest asset value appreciation in history when that day happens when you can do unsupervised full self-driving.”

Much of Tesla’s recent focus has been on the production of the Cybertruck pick-up, as well as the launch of the new Model 3 Performance saloon.

The firm claimed to have produced 1000 units of the Cybertruck in a week “just a couple of weeks ago”, having made efforts to ramp up production. 

“Volume production is what matters,” said Lars Moravy, Tesla’s vice-president for vehicle engineering. “That's what drives costs, and so our costs are dropping. 

"But the ramp still faces, like a lot of challenges with so many new technologies, some supplier limitations etc, and continue to ramp this year, just focusing on cost efficiency and quality."