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Tesla got to thump its chest this week. In a Wednesday earnings call with investors, CEO Elon Musk and company shared better-than-expected sales and financial numbers for the third quarter of 2024. That good news caused the electric vehicle-maker’s stock to rebound following what had been a disappointing sales year so far, with the slump compounded by a tepid reaction to the “We, Robot” event earlier in October, when Tesla debuted its autonomous Cybercab.
A few important factors underlie Tesla’s big rebound: Manufacturing costs fell, the refreshed Model 3 is doing well, and the Cybertruck has begun to sell in big enough numbers to help the company’s bottom line. Then there was this line from Musk’s presentation: “Preparations remain underway for our offering of new vehicles – including more affordable models – which we will begin launching in the first half of 2025.”
You might think that sentence suggests the long-rumored $25,000 Tesla is, at last, right around the corner. But when pressed by an investor whether the company would indeed build a "$25,000 non-robotaxi regular car model," Musk called the idea “pointless.” "It would be silly. It would be completely at odds with what we believe," he continued, saying that it’s “blindingly obvious” autonomy is the future.
It’s beginning to look like the idea of a little human-driven Tesla that costs as much as a Toyota Corolla will forever be a fantasy. One could argue, though, it has already done its job. The promise of the “Model 2,” perpetually dangled in front of the world as something just a few years away, enticed many people — including, crucially, investors — to believe Musk would extend his dominance of the EV market and truly conquer the car industry by offering an entry-level electric car for the masses. But if that ever was the plan, it isn’t anymore.
Tesla has always played fast and loose with deadlines and promises. It finally launched the Model 3 after years of promising the $35,000 Tesla, though obtaining the base version of the car at that price was a major challenge. In fact, most Model 3s that sold cost well into the $40,000s, if not more. The cheapest one you can order today starts at $43,000 before incentives.
The even smaller Tesla has been the topic of long-running rumors, buoyed by signals from the mothership. In 2022, Musk simply had “too much on his plate” to work on the car. In 2023, when Tesla finally began to sell a new vehicle, it was not a cheap compact but the Cybertruck. Musk then reportedly tabled the cheap Tesla indefinitely.
That didn’t stop the optimism. In the leadup to this week’s earnings call, one major analyst said it was the potential $25,000 EV, not the Cybercab or any of Tesla’s future-looking autonomous projects, that would drive the company’s success (and stock price) in the short term. After all, an EV with that MSRP could have a true cost under $20,000 after tax credits. At that point, it would undercut even entry-level gas cars in the U.S.
During the call, while scoffing at the idea of a small Tesla for carbon-based drivers, Musk pointed out that the Cybercab is technically a $25,000 car after tax breaks (though, this is the same man who, while throwing his weight behind the Trump campaign, has said that ending the EV tax credit would benefit Tesla). It’s just one that happens to have no steering wheel and no pedals. Teslarati concluded that the company’s promise of more affordable cars to come in the beginning of next year refers to lowering the prices of Tesla’s current offerings, not any plans to debut something new and different.
The EV market has changed a lot since the dawn of this decade, when Tesla rolled out the Model Y and cemented its grip on the industry. The rise of the super-cheap Chinese EV in particular spooked not only Western governments, but also American car companies that had dreams of competing for the lower end of the market. Combine that with Musk’s insistence that Tesla remain a lean, innovative firm rather than maturing into a boring EV-maker and you arrive at this point, with Musk going all in on trying to win the race for the true self-driving car instead of diversifying the kinds of vehicles it’s actually selling today.
History could prove him right. Still, that’s cold comfort for anyone who’d been hoping for a small, cheap EV they could drive themselves. It’s certainly possible to envision the Cybercab adapted for human drivers, but Musk is adamant that won’t happen. So an affordable, normal EV will have to come from elsewhere.
And it might. Despite gloomy headlines about a supposed slump, EV sales in America are steadily rising. At the less expensive end of the market, Chevy has begun selling the base-level version of the Equinox EV at the promised $35,000, which could fall under $30,000 with tax breaks. The Chevy Bolt should be even cheaper than that when it returns for the 2026 model year. Detroit has a whole lot to figure out in the coming years about how to build electric vehicles profitably, but, at the very least, the legacy carmakers might actually offer you an affordable EV — with a steering wheel.
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Plus more of the week’s biggest development fights.
1. Central Michigan – I regret to inform you of this back-and-forth between candidates running for Congress and a would-be constituent because it’s a warning sign for the renewable energy sector (and sort of broke my brain).
2. Doña Ana County, New Mexico – I suggest you pay closer attention to the federal permitting fight playing out over Oracle’s Project Jupiter.
3. Phoenix, Arizona – Does anyone want to tell me what happened to the Lava Run wind and solar Project?
4. Nashville, Tennessee – Data center developer DC Blox is hitting a roadblock in Nashville. Let’s hope it doesn’t turn into a legal zoo.
The Senate’s compromise bill enters the chat at a moment when federal land and anti-pipeline advocates are already quite activated.
The AI data center backlash is getting louder in D.C. ahead of the midterms – and it’s poised to collide head-on with the new permitting reform deal being negotiated in Congress.
This week, major environmental advocacy organizations are taking large public steps to lean in on the data center fight. The League of Conservation Voters and Sierra Club, I’ve been told, are imminently announcing a $250,000 ad buy in the Washington, D.C. market focused entirely on decrying fossil fuel-powered data centers and Trump administration policies to speed up their construction. The Wilderness Society, a prominent land conservation organization, announced it now supports a moratorium against data centers on “public lands” focused on the roughly half billion acres under the Interior Department’s stewardship. And Earthjustice on Thursday did a detailed report claiming that 80% of the data centers under development “bringing their own power” are going to rely on gas generation.
“We are trying to reach a D.C. audience and add to the conversation on data centers,” Sara Chieffo, LCV’s head of government affairs, told me of the ad buy. “We’re at a time when there have been no regulations passed at the federal level on Big Tech, or data centers, and we have communities from very many different backgrounds, across the political spectrum, really shouting for enforceable safeguards to be put in place for data center development. For their pocket book, for air and water, and for having a say in what their actual communities look like.”
In a vacuum, all of this action would feel normal – what environmental organization isn’t focused on data centers right now? And if this much fossil fuel is going to be burned in the name of computing, why wouldn’t these groups be focused so intently on the problem?
But there’s another wrinkle: It’s impossible to ignore the elephantesque permitting debate in the room, given any progress on a bill would undoubtedly help data centers with any kind of federal nexus, as well as some of the large fossil power infrastructure they’re demanding.
Last week, we all learned of the Bipartisan American Affordability and Jobs Act, or BAAJA, which would radically change federal permitting for essentially all large infrastructure projects with a federal nexus. The bill, negotiated by top Republicans and Democrats in the U.S. Senate, aims to expedite bureaucratic review processes for industrial projects with any presence on federal lands, water pollution risk covered under the Clean Water Act, and/or potential impacts to federally-protected species habitat and historic sites. Many of these changes, like significantly narrowing claims under the National Environmental Policy Act, could mean quicker permitting decisions from the federal government; other policies in the bill, like a truncated statute of limitations for lawsuits, could mean developers avoid significant and costly litigation risk as they apply for federal permits.
There’s a lot to potentially love in this bill for decarb hawks – transmission reforms and permitting certainty, among other things. But the bill is incredibly divisive, especially amongst those interested in seeing renewable energy boosted without undue compromise for fossil fuel development and preserving the existing legal framework for protecting the environment through litigation. So controversial is this bill that all of the organizations I’ve mentioned – LCV, Sierra Club, NRDC, Wilderness Society, Earthjustice – have so far eschewed explicit formal statements opposing the bill, instead expressing caution about air and water impacts while saying they need more time to review it and speak with lawmakers.
It’s clear though the environmentalist community wants people to think about data centers as debate on the bill approaches. Those who publicly oppose the bill at this moment say its enactment under the current administration would fully unlock federal acreage for the worst incarnation of an unfettered fossil-powered data center boom. “In any permutation, this bill is a good thing for data centers,” said Brett Hartl, director of government affairs for Center for Biological Diversity. After the bill was introduced, an organizing call between environmentalists leaked revealing discussions on how to stop it from gaining traction. One idea raised, per a transcript of the call published by Punchbowl News, was leaning heavily into talking about AI data center permitting.
I asked Chieffo if the LCV ad buy was related to the permitting debate in D.C. She told me it was in the works before senators introduced the bipartisan permitting deal last week. “This is a longstanding focus of ours, to make sure the buildout of data centers do not perpetuate dirty energy or exacerbate the climate crisis,” she told me. Then I asked, if this isn’t about the permitting bill, but it is about federal policy about approving data centers, then how do AI data centers play into the conversation around permitting reform? Do you see the AI data center conversation playing a role in the permitting reform debate?
“The way I would answer that is, well, there are equities and impacts that permitting reform has on the ability to build data centers in this country. And there’s a much larger conversation that should be happening – and isn’t yet happening – around fully holding data centers and Big Tech accountable for their environmental and consumer impacts, safety, and broader regulation. It’s a much bigger conversation than just permitting conversations,” Chieffo told me.
Then she added something else: “The provisions in conversation right now in the Senate do not cover the full suite of what we believe we need to see to hold data centers accountable and address the environmental impacts, let alone the other impacts folks are concerned about with jobs, safety and the rest.”
There’s absolutely a hypothetical risk that enacting such sweeping permitting legislation could enable a faster fossil-powered AI data center buildout, particularly in two ways: federal land development and easier pipeline permits.
We know that President Trump’s executive order encouraging data centers on federal land has led to interest in developing large projects on Interior Department acreage in Arizona, Idaho, Nevada, Oregon, and Utah. How many of these projects are serious is unclear, partially because the federal land permitting process is opaque, and also due to some permitting applications gleaning more early-stage speculation than a commitment (see: Clearway’s reversal on this project). At least some of this development would be powered by gas, as we’ve previously covered.
There’s also the pipelines. We’ve previously covered how the bill’s changes to the Clean Water Act would take away a provision under the law previously cited by Democratic governors to block pipeline expansions, while limiting state and tribe authority under the law to cite impacts other than direct water discharges when rejecting or blocking permits. In the name of project certainty, the bill would also enshrine protections against approval revocation for all kinds of energy facilities, including pipelines. Many of the pipelines under development today are capacity expansions and not explicitly for data centers, and many of them may be approved regardless of whether BAAJA becomes law. But it’s almost impossible to divorce new gas projects from the data center industry’s fortunes, given climbing demand.
Advocates for decarbonizing the U.S. economy who support the bill say the legislation offers a safer trade-off than critics suggest. They put forward that most data center development is not on federal lands, rendering much of the actual AI infrastructure outside the scope of the bill’s impacts. In addition, they argue there are potential upsides, like the bill’s provisions unlocking new transmission development, expediting interconnection queue processing, and making data center developers pay for new energy grid upgrades, all of which could be good for renewable energy development.
Grayson Flood, a senior fellow at Groundwork Collaborative, told me he believes the bill will actually incentivize more data center developers to hook up to the grid and may result in fewer projects relying on off-grid gas plants constructed purely for operating GPUs. Studies have shown building off-grid can be almost twice as expensive. By reducing barriers to connection, and encouraging new transmission that unlocks renewable energy, Flood said one can easily see a pathway to a cleaner data center sector in the future under the bill.
“At the end of the day, if you want these data centers to be powered by clean, firm capacity, anything from solar and storage to wind and storage to nuclear, geothermal, and hydropower, you’re going to need to have a grid that can bring those sources to the data centers, and right now we really don’t have that,” said Flood, who previously worked as legislative director for Rep. Alexandria Ocasio-Cortez. “At a macro level, we need the bulk power system built out to see the power we want to see, and this bill makes data centers pay more than any other piece of proposed federal legislation to make that happen.”
Where does this leave us? Over the next month, we’ll live through a midterms election cycle chock full of ads activating anti-data center sentiments on both sides of the aisle. Then, right afterwards, the energy sector will pivot its attention span back to Congress and fight to pass a permitting bill that will not primarily benefit data centers, but clearly has upsides its opponents will want to call attention to.
Yes, charging when power is cheap will save you money — but not everyone has that luxury.
There’s no escape when gas prices spike. You might know a station across town that’s always a dime cheaper per gallon than everybody else, but that’s about the best a driver can hope for. There’s no service station down the street that sells half-price gas after midnight. No Chevron is changing its gas price moment by moment, its big neon sign flashing like a stock ticker.
That’s exactly what’s possible as the world moves to electric cars, though. Electricity markets are complex and volatile, responding moment by moment to movements in energy supply and demand, weather, and other factors. Cars, when they’re left plugged in all day or overnight, can take advantage, charging whenever electricity gets cheap.
This dynamic environment, offering flexibility in price and in time, opens up money-saving opportunities for EV drivers that were impossible in the one-price-fits-all gasoline days. But it also creates potential drawbacks — at least for those who have fewer choices about when and where they charge.
Andrew Peterman, the director of advanced energy solutions at Rivian, touched on this topic last week during the future of mobility session at Heatmap’s New York Climate Week event. Peterman says Rivian owners do 80% to 90% of their charging at home on level 2 plugs, where the vehicle might remain parked for 14 to 16 hours.
Suppose you live somewhere like California and you come home from work in the evening. Everyone else is returning home just then, too, turning on their home A/C and causing a spike in electricity demand. “If you plug in your vehicle then and start charging immediately, you're adding strain to the grid,” he said. “But you have this really long dwell time where you may only need to charge for a few hours or a couple of hours.”
The solution — scheduling the EV to start charging later — is a core feature that’s available in many electric vehicles. Rivian is working on the step beyond that: partnering with utilities to create smart, demand-responsive charging that defers fueling until the price has fallen below a particular threshold. Given the volatility of energy markets, that’s something best handled autonomously, freeing the car’s owner from having to check on energy prices or guess when they’ll be lowest.
Those smart charging setups will pave the way for the next phase in the smart electric home: the virtual power plant, where a homeowner’s solar panels, EV battery, or home backup storage could feed power onto the grid to help balance the system during stressful times. VPPs represent yet another way the smarter grid could save electric car drivers money — in this case, making some back by letting the grid borrow energy stored in the vehicle.
What these strategies have in common is flexibility — allow the car to sit plugged in all night at home until you leave the next morning, all workday if there are plugs available at the office, or all day long if you don’t need to leave the house that day. It’s a smart approach. Our cars, while made for driving, spend most of their lives sitting around doing nothing. But not everyone has that luxury.
We’ve mentioned the problem before in terms of the convenience tax: For people who can charge at home and don’t have to drive a vast distance every day, EV ownership is more convenient than driving on gas. Say so long to stops at the gas station; just refill your battery every night in your own garage. For people who can’t regularly charge at home, it’s worse. Going to a public DC fast charger for 20 minutes is more annoying than the old-fashioned gas station pump and go.
The same thing holds for money. Those who can charge at home have much more control over the cost than those at the mercy of public charging infrastructure. Some of the Tesla Superchargers near me in the Los Angeles area cost $0.60 per kilowatt-hour in the middle of the day, when people are out and demand is high, but pricing drops to more like $0.35 in the wee hours of the night. If you can wait until midnight to charge, then you can save a huge percentage. Other networks are similar. EVgo charges the highest rates during the 4 to 9 pm period of peak demand and the lower rates during “super off-peak” hours from midnight to 8 am.
Not everyone, though, has the time flexibility to go sit in the dark at a charging station to save a few bucks.
It’s going to get even weirder than that, too. Tesla has begun to employ dynamic pricing that changes not only based on time of day, but also on station business. Prices jump if more of the plugs are in use, a move that could be read, ostensibly, as an attempt to balance charger traffic by creating an incentive to drive to less busy ones. In practice, some users say they’ve started driving to a Supercharger with one promised price and found a higher price when they arrived, just because a few other cars had arrived in the intervening minutes. (Ionna, the fast-growing charging network that represents a collaboration of the major automakers, said in an August blog that it maintains a single price all day long, at all of its stations, so drivers don’t feel like they’re being duped.)
As Peterman said, most EV drivers charge at home, where they have more control over how much they’re going to pay than at either the gas station or a public charger. But as more people think about switching over to electric so they can quit gasoline, they’re going to find the question of how much it costs to drive to work gets a lot more complex than it used to be.