Tesla co-founder and former CEO Martin Eberhard expressed his disappointment in current CEO Elon Musk’s latest decisions at HSBC’s inaugural Global Investment Summit in Hong Kong on April 2. Eberhard was responding to a rumor that Tesla had ceased work on a more affordable electronic vehicle.
Tesla’s Decision on Model 2 and Competition with Chinese EVs
“I read recently that Tesla has decided not to pursue their Model 2, their low-end car because they don’t think they can compete with the low-end Chinese cars,” Eberhard told Bloomberg TV’s Haslinda Amin. “That’s a shame; they might want to rethink that. It seems like a better market than that gigantic truck they make.” He added that he has been watching BYD, the Chinese automaker leading the conversation regarding affordable EVs. BYD’s latest release, the Dolphin hatchback, costs approximately $14,000, while Tesla’s least expensive vehicle costs customers $38,990.
Musk’s Commitment to Affordable EVs and Future Plans
Reuters reported on April 5 that Tesla was not moving forward with their plans for a cheaper EV, but Musk quickly rebuffed the claim. According to the Reuters article, three sources confirmed that plans for an EV retailing under $25,000 were scrapped in February 2024. Musk responded to the rumors on X (formerly Twitter), where he wrote, “Reuters is lying (again).” This was echoed later that week by Tesla’s Head of Design, Franz von Holzhausen, who urged the public not to believe everything they read during a Q&A at the Petersen Automotive Museum in Los Angeles.
Musk has long been a supporter of lowering the cost of electronic vehicles. He laid out his plans for an affordable, family EV as early as 2006 in a blog post titled “The Secret Tesla Motors Master Plan (just between you and me).” “Without giving away too much, I can say that the second model will be a sporty four door family car at roughly half the $89k price point of the Tesla Roadster and the third model will be even more affordable,” Musk wrote. “In keeping with a fast growing technology company, all free cash flow is plowed back into R&D to drive down the costs and bring the follow on products to market as fast as possible.” He added, “When someone buys the Tesla Roadster sports car, they are actually helping pay for development of the low cost family car.”
He reaffirmed this plan last year, telling Sandy Munro of Munro & Associates, “We are working on a low-cost electric vehicle that will be made at very high volume. We’re quite far advanced in that work. I view the production line plans for that every week and I think the revolution in manufacturing that will be represented by that car will blow people’s minds.”
If Musk is to be believed, this line of cars would be highly sought after. The EV market has steadily grown over the past few years, but purchasing an electronic vehicle is still considered an option only for the wealthy. If Tesla were to put out a cheaper electronic vehicle, it would be an exciting product for those with lower incomes who are passionate about being eco-friendly.
