Sign In or Create an Account.

By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy

Electric Vehicles

Tesla’s Cheap EV Switcheroo

Elon Musk was never going to build the Model 2.

Elon Musk as Lucy.
Heatmap Illustration/Getty Images

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.

Green

You’re out of free articles.

Subscribe today to experience Heatmap’s expert analysis 
of climate change, clean energy, and sustainability.
To continue reading
Create a free account or sign in to unlock more free articles.
or
Please enter an email address
By continuing, you agree to the Terms of Service and acknowledge our Privacy Policy
Climate Tech

Why Is Thea Energy, the Fusion Company, in New Jersey?

The birthplace of electricity has more recently been known more for smokestacks and traffic jams than world-changing energy breakthroughs. But that could be about to change.

New Jersey things.
Heatmap Illustration/Getty Images, Wikimedia Commons, Thea Energy

Why New Jersey? I’ll admit, that’s what I was wondering as my S.U.V. took a Sopranos-adjacent route from midtown Manhattan to an industrial park in Kearny, the Newark suburb bounded by the Passaic River to the west and a landfill to the east, where the holy grail of energy may soon be forged.

I was visiting the nuclear fusion company Thea Energy, which is in the process of designing a stellarator, a kind of torqued donut — French crullers were mentioned several times by Thea cofounder and chief executive Brian Berzin during my time there — that, with the help of 450 magnets and about 15 megawatts of power, could one day hold plasma in place, thereby creating the conditions for the same nuclear reaction that powers the stars to happen here on Earth.

Keep reading...Show less
Blue
Politics

Internal Agency Memo Calls for Political Reviews of Solar, Wind Projects

The widely circulating document lists more than 68 activities newly subject to upper-level review.

Doug Burgum.
Heatmap Illustration/Getty Images

The federal government is poised to put solar and wind projects through strict new reviews that may delay projects across the country, according to a widely circulating document reviewed by Heatmap.

The secretarial order authored by Interior Secretary Doug Burgum’s Deputy Chief of Staff for Policy Gregory Wischer is dated July 15 and states that “all decisions, actions, consultations, and other undertakings” that are “related to wind and solar energy facilities” will now be required to go through multiple layers of political review from Burgum’s office and Interior’s Office of the Deputy Secretary.

Keep reading...Show less
Energy

AI Could Help Decarbonize the Grid. It’s Already Helping Find More Oil.

Two former Microsoft employees have turned their frustration into an awareness campaign to hold tech companies accountable.

AI and oil drilling.
Heatmap Illustration/Getty Images

When the clean energy world considers the consequences of the artificial intelligence boom, rising data center electricity demand and the strain it’s putting on the grid is typically top of mind — even if that’s weighed against the litany of potential positive impacts, which includes improved weather forecasting, grid optimization, wildfire risk mitigation, critical minerals discovery, and geothermal development.

I’ve written about a bunch of it. But the not-so-secret flip side is that naturally, any AI-fueled improvements in efficiency, data analytics, and predictive capabilities will benefit well-capitalized fossil fuel giants just as much — if not significantly more — than plucky climate tech startups or cash-strapped utilities.

Keep reading...Show less
Blue