Exclusive: Tesla scraps low-cost car plans amid fierce Chinese EV competition

The decision represents an abandonment of a longstanding goal that Tesla chief Elon Musk has often characterized as its primary mission: affordable electric cars for the masses. His first “master plan”, opens new tab for the company in 2006 called for manufacturing luxury models first, then using the profits to finance a “low cost family car.”

Tesla shares were down about 3% in early afternoon trading after the Reuters report.

Musk has since repeatedly promised such a vehicle to investors and consumers. As recently as January, Musk told investors that Tesla planned to start production of the affordable model at its Texas factory in the second half of 2025, following an exclusive Reuters report detailing those plans.

Everythingispenguins,

Anyone with a minute of spare time and access to the Internet can easily see why this is the end of Tesla as an independent company. Success in the automobile market is cars for the masses. Time and time you see a company who made it bread and butter on small cars buying up luxury brands as they failed

  • VW owns Lamborghini and Bentley
  • Tata owns Jaguar Land Rover
  • Fiat owns Maserati (and apparently 12 other bands) Aston is independent but has declared bankruptcy seven times. And Ferrari used to part of Fiat but was spun off)

I am sure there is more, the money is and has always been in small cheap cars. Making luxury only cars is a road to failure.

hark,
@hark@lemmy.world avatar

I don’t understand the article title. With the looming threat of super cheap Chinese EVs, Tesla decides to cancel their low-cost car. How does that help Tesla compete? Doesn’t seem like he has a plan to counter competition. Maybe he’s relying on the steep 25% tariffs that the US places on Chinese EVs (that they’re also thinking of increasing even higher). Add this to the massive pile of broken Musk promises. The article goes on to mention “self-driving robotaxis” which I assume will be yet another broken Musk promise.

AA5B,

Maybe he’s going all in on self-driving but that really doesn’t seem anywhere close

hark,
@hark@lemmy.world avatar

What blows my mind is that he’s sabotaging his own engineers by forcing them to only rely on cameras for self-driving. Let’s excuse the consumer vehicle market for a moment since maybe the added cost of LIDAR and RADAR is too much. That doesn’t explain why he also wants the robotaxis to only rely on cameras. Robotaxis would provide service to far more people per vehicle, so the per-vehicle cost shouldn’t matter as much. Replacing a human driver alone recoups the cost of LIDAR and RADAR in a short amount of time.

Varyk,

I had the exact same question after reading the article.

Chinese evs are cheap and their build quality is rapidly improving.

Tesla roofs and doors fall off so he’s going to keep prices the same?

Without a cheap Tesla equivalent, I don’t see how Tesla maintains its market share unless the Chinese manufacturers make a suicidal move and start pricing their cars higher than Tesla.

alcoholicorn,

What do Chinese EVs have to do with the American market?

Veedem,
@Veedem@lemmy.world avatar

The theory is that if they were able to be sold here at a reasonable price while meeting our much stricter safety standards, it would create competition and this apply downward pressure on prices.

MrVilliam,

So Biden blocked Chinese EV from entering the American market in order to keep automaker CEOs wealthy af? I feel like this is a silly question to bring up, but why is it that a car can be built in China, shipped to the other side of the planet, eat the cost of tariffs, and it’s still either so good or so cheap that it is dangerous competition to American automakers? It kinda feels like we only encourage free market capitalism until old money gets challenged by innovation. It’s frustrating. We want boring, basic sedans with limited features with EV tech slapped inside instead of ICE tech, and we want to pay under $25k for it. I’m all for phasing out ICE vehicles, but every EV is a luxury vehicle at a time when half the country is living paycheck to paycheck. We need uncool, cheap EVs to replace uncool, cheap gasoline cars. We need a Prius or Yaris of EVs. We need Civic and Accord EVs. Taurus, Impala, Neon, Escort, etc. Average Americans don’t want and cannot afford a goddamn EV Escalade or whatever.

Riven,
@Riven@lemmy.dbzer0.com avatar

As a civic owner. Yes please, give me an electric civic. I drove a Benz previously and they’re a pain in the ass and expensive when anything goes wrong with them, and trust me, it will.

pennomi,

The Nissan Leaf is pretty decent. Grab a used one and it’s quite cheap.

MrVilliam,

I just checked and even new, base model ones are right around the price point I said. I’ll keep an eye on Nissan. I have heard good things about Kia/Hyundai EVs too but I haven’t done much research. I’m hoping to not need a new vehicle for a long while, so I’m not particularly motivated to dig deep yet.

Blaster_M, (edited )

BYD (Chinese company) is building an auto plant in Mexico specifically so they can sell in the North American market. Their EVs are actually pretty decent and sold like hotcakes in SEA and home markets. They’re set to produce and sell locally in Europe, Africa, SA and NA now. Their cars are targetting the sub-$20k-$24k market. Overseas their cars sell for the equivalent of $14k-$19k

alcoholicorn,

Does this mean BYD will be able to sell Mexican produced cars in America?

I’d honestly be surprised if they didn’t update the laws to prevent Chinese competition no matter what the companies do. They’ve done it for the auto industry in the past, to countries they’re not hostile towards, and they’ve done it to Chinese companies in other industries with substantial lobbying dollars, notably phones, IT infra, social media, and weapon manufacture.

Blaster_M,

There is Mexican competition too in this sector. They’re building their own national brand of EV and are gunning to beat BYD to the market.

pendulum_,
@pendulum_@lemmy.world avatar

And despite the Lemmy/Reddit circle jerk that “EVs are bad”, BYD pass the notoriously strict Australian safety standards and sell well here. The BYD Seal seems to be everywhere of late

snooggums,
@snooggums@midwest.social avatar

Elon lied about something? I’m shocked!

Ok, I’m not that shocked.

DdCno1,

Eh, he's an awful person and frequent liar, but not this time. Modifying plans as market conditions are changing isn't the same thing as lying. Few people were taking Chinese automakers seriously in 2006.

player2,

So Biden is trying to block the import of BYD cars, and now Tesla isn’t making an affordable car, where are we supposed to get affordable electric cars from now?

snooggums,
@snooggums@midwest.social avatar

There’s all of the other automakers that are dipping their toes into the electric market.

Oh wait, they are all leaning hard into SUVs. Nevermind.

astrsk,
astrsk avatar

That’s what happens when the major incentive from subsidies and tax breaks is focused on SUV production. We need more regulation on safety and functionality as well as deeper incentives to cover the range of market needs instead of a single weight class.

SnotFlickerman, (edited )
@SnotFlickerman@lemmy.blahaj.zone avatar

How else would they be able to keep shaming poor people and telling them climate change is their fault?

It’s dooming the majority of US car buyers to a used market where they will struggle to find an affordable EV whose battery isn’t toast when there is a comparable ICE vehicle for just a little less than the EV.

Cue shifting the blame to poor people and increasing gas taxes on consumer vehicles.

Didn’t something similar go down in France?

Dudewitbow,

Kia has a reletively affordable one, its a game of wrapping your head and accepting its a Kia.

PP_BOY_,
@PP_BOY_@lemmy.world avatar

I, for one, cannot believe Tesla went back on a promise.

stanleytweedle,

I don’t understand how the stock price doesn’t crash. I thought the whole basis for the ridiculous value was the idea that eventually nearly everyone would be driving a Tesla but here they are just backing out of a massive market to focus on shitty ‘luxury’ EVs. I just don’t get how the price hasn’t caught up to reality yet.

gaael,

Share prices catching up to reality, good one 🤣🤣🤣

stanleytweedle,

Yeah those two words rarely belong in the same paragraph.

golli,

Personally I don’t understand it either, but I think the thesis is/was that Tesla isn’t just a car company.

So beyond just the car business you’d also have the vertical manufacturing including batteries, eventually autonomous self driving, the charging network, and even at people’s homes stuff like the solar roofs.

How that ever made them more expensive than basically the rest of the car industry combined I don’t know.

I could see the high evaluation if they have a lead in self driving, but they don’t have any edge compared to their competitors including Google/wamyo, Mercedes and so on

Alto,
Alto avatar

It's pretty simple. The market is not rational, and anyone trying to convince you otherwise is an idiot

ashok36,

In fairness, tesla is not just a car company. Batteries and solar are a significant and growing part of their business.

Their plan was always to popularize evs and then sell batteries to Ford, Chevy, and all the others.

hark,
@hark@lemmy.world avatar

But Tesla doesn’t make their own battery cells. They put cells (made by suppliers) together as a pack, but that is something that their competitors can easily do themselves (and they do already). Their solar business doesn’t seem to be significant at this point, and I can’t imagine it would be considering the steep cost required to get an installation done.

ashok36,

I think you’re incorrect. They, in partnership with Panasonic, make a ton of cells at their Nevada gigafactory. They have five more gigafactories where they make other components like motors, batteries, photovoltaic cells, etc…

I also think “easily” is pulling a lot of weight in your sentence there. Scaling up battery pack production to hit manufacturing goals in the next 10 or so years is going to be difficult for anyone attempting it.

All that said, fuck Musk I wish he’d take a ride to Mars already.

hark,
@hark@lemmy.world avatar

Tesla has had a head start, but BYD is hot on their heels and is looking to surpass them soon: visualcapitalist.com/visualizing-global-electric-…

I think one problem for other companies is that they already have ICE vehicles that they’re content with making up the vast majority of their sales. Those other companies are still only pricing EVs for the higher-end market, which don’t necessitate higher unit production to make significant profits. Tesla only makes EVs and thus dedicate 100% of their manufacturing capacity to EVs. BYD is also a pure EV manufacturer and seems more capable of expanding than even Tesla. Tesla doesn’t have the moat that its stock price pretends it does.

AA5B,

Same here. I’ve been a huge fan of Tesla disrupting the car industry and have been one of those seeing the potential for ridiculous growth, but wtf? Where’s the growth potential for cars now?

Sure, Tesla does other things but I find it hard to believe they have the growth rate and profit margin of cars. There’s no way the company has ridiculous growth off the other stuff: it may still be big and more stable of a market but it’s much slower growth.

I glossed over the previous stock dips with reckless optimism, but I don’t see why it didn’t immediately tank this time

jmiller,

Last year their revenue from selling cars, powerwalls, and solar tiles was around $90 million. Makes the stock price seem crazy, yes. But then they sold $1.8 billion of carbon credits to other auto manufacturers, and that costs them basically nothing. Still doesn’t justify the stock price, but makes it less ridiculous. Selling carbon credits is Tesla’s main business at this point, the things they make just provide the justification for it.

bitchkat,

That math doesn’t seem right. If you use $50k as an average price their cars sell for then $90,000,000 / $50,000 is 1800 cars. Tesla sold 1.8 million cars in 2023.

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