Let’s discuss a Tesla (TSLA) claim by Reuters, Elon Musk’s short rebuttal, Musk’s robotaxi announcement, and after hours action.
Tesla Scraps Low-Cost Car Plans
Reuters reports Tesla Scraps Low-Cost Car Plans Amid Fierce Chinese EV Competition
Tesla has canceled the long-promised inexpensive car that investors have been counting on to drive its growth into a mass-market automaker, according to three sources familiar with the matter and company messages seen by Reuters.
The automaker will continue developing self-driving robotaxis on the same small-vehicle platform, the sources said.The decision represents an abandonment of a longstanding goal that Tesla opens new tab 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.”
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.
Tesla’s cheapest current model, the Model 3 sedan, retails for about $39,000 in the United States. The now-defunct entry-level vehicle, sometimes described as the Model 2, was expected to start at about $25,000.
The stark reversal comes as Tesla faces fierce competition globally from Chinese electric-vehicle makers flooding the market with cars priced as low as $10,000. The plan for driverless robotaxis, which could take longer to deliver, presents a stiffer engineering challenge and more regulatory risk.
Two sources said they learned of Tesla’s decision to scrap the Model 2 in a meeting attended by scores of employees, with one of them saying the gathering happened in late February.
“Elon’s directive is to go all in on robotaxi,” that person said.
The third source confirmed the cancellation and said new plans call for robotaxis to be produced, but in much lower volumes than had been projected for the Model 2.
Several company messages reviewed by Reuters about the decision included one on March 1 from an unnamed program manager for the affordable car discussing the project’s demise with engineering staff and advising them to hold off on telling suppliers “about program cancellation.”
A fourth person with knowledge of Tesla’s plans expressed optimism about the decision to pivot away from the cheap-car strategy in favor of robotaxis, a segment Musk has envisioned as the future of mobility. The source cautioned that Tesla’s product plans could change again based on economic conditions.
‘HALT ALL FURTHER ACTIVITIES’
Tesla called the affordable-car project NV91 internally and H422 externally when discussing it with suppliers, according to two of the sources and company messages reviewed by Reuters.
Messages from the unnamed Tesla program manager to staffers referenced those code names in discussing the project’s termination. One of those messages sent March 1 said that “suppliers should halt all further activities related to H422/NV91.”
Musk unveiled a prototype of the angular, stainless steel-clad truck in 2019 and predicted a starting price of about $40,000. The vehicle finally arrived last year, but the lowest price version of the truck won’t be available until 2025, at a price of about $61,000.
During the same period, BYD has seen its electric-vehicle sales soar in China, growing from about 130,000 to more than 1.5 million, not including its thriving business in plug-in hybrids or its fast-growing exports.
BYD already offers a slew of low- and mid-range models, including its Seagull hatchback for less than $10,000. The Chinese automaker now plans to export that car for more than double that price – but still lower than the target for the cheap car Tesla had planned to build.
Liar
The rebuttal “This Reuters report is false according to Tesla CEO Elon Musk.” is more than a bit curious. It points to the response by Musk “Reuters is lying again”.
Then after hours Musk Tweeted:
RoboTaxi
TSLA After Hours
Musk’s damage control was successful, for now. But if anything, it appears to confirm the Reuters report.
Fully Autonomous Car
Tesla has yet to prove it can produce an autonomous car despite years of predictions by Musk that one was just around the corner, an expectation that partly underpinned Tesla’s soaring valuation. The automaker faces lawsuits and investigations into crashes involving its Autopilot and Full Self-Driving driver-assistance systems, which are not fully autonomous. Tesla has blamed the accidents on inattentive drivers.
Tesla’s Autopilot woes are among a number of problems that have drawn scrutiny. The automaker faces another investigation into the driving-range estimates of its cars, launched after Reuters reported last year that Tesla had rigged the in-dash range meters in its vehicles to give rosy projections. Reuters reported in December that the automaker blamed “driver abuse” for chronic failures of suspension and steering parts it long knew were defective.
Flashback 2016
Please note: After Model 3, Tesla Motors Will Make an Even More Affordable Car
We Dug Our Own Grave
On October 19, 2023, Motor Trend reported Elon Musk: “We Dug Our Own Grave With Tesla Cybertruck,” Which Finally Arrives in November
Roughly four years after we first saw the Tesla Cybertruck in all its stainless-steel glory, the automaker has confirmed its plans to start delivering the first batch of the massive pickup trucks to customers on November 30.
Musk says he has driven the Cybertruck and “it is an amazing product.” But “there will be enormous challenges in reaching volume production with the Cybertruck and in making the Cybertruck cash-flow positive.”
Making prototypes—which is what Tesla has been doing with the truck for years now—is easy, Musk says. Making the production version for sale to customers is “10,000 percent harder,” he insists, because the truck is so “radical” and “special.” Those are polite ways of saying stainless steel is hard to work with, and flat expanses of bodywork are unforgiving when it comes to gaps, fit, and finish.
Economies of scale won’t help bring down cost for a while. The CEO still thinks Tesla will eventually build 250,000 Cybertrucks a year, but said it won’t reach that production rate until sometime in 2025 at the earliest.
“We dug our own grave with Cybertruck,” Musk told investors, calling it the type of special product with lots of bells and whistles that only comes along once in a while.
Tesla’s Deliveries Drop for First Time Since 2020, It’s Demand Not Supply
On April 2, I commented Tesla’s Deliveries Drop for First Time Since 2020, It’s Demand Not Supply
Tesla’s (TSLA) quarterly deliveries in the first quarter of 2024, are down 8.5% from a year earlier. It’s the first quarterly decline since 2020.
If Tesla can scale up semi production that would be a big boost. But Elon Musk has been promising 50,000 semis a year, every year for four years and has delivered a grand total of 100.
Tesla has a drought of new products and competition is catching up everywhere. It’s autonomous driving features are an outright joke. More importantly, they are a huge safety risk.
Tesla far lags Waymo on autonomous driving features and safety.
Every year since 2017 or so, Musk has said he would deliver fully autonomous driving in two years. Waymo is close. Tesla is not even in the ballpark due to flawed design.
RoboTaxi Zero Chance
Tesla has the worst autonomous driving capabilities around. I will do a separate report on where the technology stands.
Meanwhile, I await Musk’s August 8 robotaxi announcement. Expect to be underwhelmed and overpromised. A Tesla robotaxi is not close to being ready. Waymo is here and now.
I consider Musk a genius. But at best he overpromises and underdelivers for years on end, especially with autonomous driving, but also semis, the M2, and the cybertruck .
If he does not believe what he says, that’s even worse.
This makes me want to drive a Civic.
“Reuters is lying again”
,
“Tesla Robotaxi unveil on 8/8”
In fully fiancialized idiotopias, where all wealth have already been transferred to the rankest and most gullible of straight up retards and absolutely noone else: The only thing which matters is coming up with yet another childbrained piece of trivially obvious pure hype about “all the great things I’m gonna do sometime in the fuuuutuuuure!!!”, whenever your last piece of equally trivially obvious pure nonsense finally becomes too obvious for even the Fed’s favored retardocrats to fall for it anymore.
Meanwhile, on Planet Real: General purpose Taxis will become truly robotic once the infrastructure is there for them to not share roads with living drivers. Not before. Not here, not in China, not anywhere. Aside from perhaps the scifi magazines Elon grew up uncritically bingeing on.
Also: Batteries will NEVER serve as primary energy storage for general purpose, arbitrary range vehicles. Again: Not here, not in China, not anywhere. BEVs can serve more needs in China, due to much greater population density there, and because longer trips are MUCH better served by their infinitely more useful high speed rail. But still: Long haul cars, won’t be powered by batteries even there, for anything other than silly stunts. Electric cars are very much possible in safe and stables societies. But only if/when infrastructure is there to power the long, fast, high draw segments of trips directly from the infrastructure. Batteries will NEVER serve that role. Once that infrastructure is in place, the cars can also be self driving on those sections of “road.” Not before.
“I consider Musk a genius.”
I would suggest keeping yourself to higher standards than that …..
3+ ton, 600hp BEVs for general road use are, just like truly self driving anything on regular roads, just silly. Dumb. Stupid. Childish. Period. Neither idiocy serve ANY purpose other than selling petty hype to rank morons on Fed welfare who are dumb enough to fall for anything. As well as provide make-work where the dilettante offspring of said Fed welfare recipients can, misguidedly, pretend they are some sort of useful beings. Like virtually all else in fully financialized idiot’s-only societies, all that will never come of any of it, is the destruction of even more of the wealth and capital which was meticulously built up by prior generations. For no other reason than enriching and empowering the dumbest of the Fed enabled dumb.
There is, literally, NOTHING to any of it. Just 100% pure value destroying hype. For every dime” inveeeested” in the childishness by some Fed enriched lesser-than-lowbrow: America is left 2 or more dimes poorer. Without exception. And that will never change.
Electric cars will ultimately win this race because they are so much faster and quieter than any internal combustion engine. When there are lots of EV’s driving around, a gas powered vehicle will seem slow and boring to drive.
I don’t think he’s a genius except at cons.
“BYD already offers a slew of low- and mid-range models, including its Seagull hatchback for less than $10,000.”
Kind of sounds like the Henry Ford of electric vehicles. A vehicle the common person can afford. Ford had to go to court to overcome ALMA, which at the time controlled who could produce cars. Cars were effectively restricted to wealthier people at the time.
The $10k cars in China couldn’t be put on the road here. The problem: government regulation. Makes things a lot more expensive. Not saying we shoud not value safety, but there are many things that raise costs that are not necessary.
Right on cue. The US government is worried about Chinese excess capacity because it might cause a huge drop in prices of all sorts of goods. The Fed and Treasury are obsessed with keep prices stable (high). Why ?
https://www.reuters.com/business/yellen-launches-contentious-meetings-chinese-excess-production-threat-2024-04-05/
To support union jobs obviously. Protecting the US Auto industry is pretty much at the top of the list of priorities for both parties.
If they truly let China sell cars for 10-15K all the US auto makers would be in deep trouble.
Reuters and are “news organizations “ are consistent liars. Remember Musk is being prosecuted by the Department of (in)Justice for not hiring any illegal alien criminal invader immigrants when DOJ own regulations prevent them from hiring any.
Musk is a genius alright, in marketing and swindling. Should the massive liquidity in markets ever dry up (admittedly almost impossible), he will be one of the first to be discovered swimming naked.
How could anyone take a smart phone on wheels seriously?
Reuters wrote an article claiming something bad about Tesla and Musk says the article is junk. If you know anything about Elon Musk you know that he consistently overpromises on delivery dates. He does it to the public of course but also sets agressive delivery dates for his teams. It’s part of his management style and it works although many short-term investors find it disconcerting. In the end, he delivers and that is what counts.
When is the end? When will we know if he delivers in the end? Delivers to whom? By the time he delivers, who will be left to deliver to?
From design to market, Musk has not shown that he is able to keep up with the product cycle rates of the competition. Tesla has been staying afloat by squeezing sales out of its profit margin. Its marginal demand is not sustainable. So, in the end, what counts are more models, more quickly, less expensively. Whether Musk can deliver that is an open question. He hasn’t so far.
Let’s go Big Picture… I will now explain in detail… why EVs…. which are not in any way shape or form ‘Green’…. exist.
Why the Ministry of Truth runs endless hype campaigns on cnnbbc….and why governments subsidize them to the tune of hundreds of billions…
Consider this statement: We are steaming oil out of sand, drilling miles beneath oceans for oil, drilling hundreds of thousands of holes in the ground, dropping in bombs – then sucking up the dregs.
Surely — given we are completely reliant on fossil fuel energy to power our civilization — we should be concerned that these methods of oil extraction … appear to be … shall we say … desperate.
Surely any objective observer would look at this and think…. hmmm…. if there is so much of the easy stuff remaining … why are we doing these things
The thing is … we are desperate… see https://energyskeptic.com/2021/the-end-of-fracked-shale-oil/
So how do EVs fit into this equation … and renewable energy… and how about climate change????
These are what I refer to as The Three Pillars of Bullshit.
It goes like this… the Men Who Run the World need their barnyard animals to remain productive… positive… happy. If the animals were to get wind of the desperate situation with respect to energy … they would get spooked… in fact they would panic.
And panicked barnyard animals are NOT productive. If they conclude that the cheap and easy energy are on the downslope … they fall into despair. They begin to believer there is no future… why breed – why study – why invest — etc… alcoholism and drug abuse would explode higher … etc…
Barnyard animals MUST believe the future is awesome — they must believe their progeny will have the same opportunities to pillage and buy lots of stuff just like they did.
The Men Who Run the World – and their minions … are very much aware of this.
They need to cover up the desperation situation with some fancy PR.
One bright thing in the Ministry of Truth — which was tasked with the coverup … suggested inventing this thing call Global Warming (they changed it to Climate Change cuz some places were cooling .. no problem the barnyard animals will believe whatever cnnbbc tells them).
Notice how fossil fuels are The Enemy? How we Must wean off them? No mention of the fact that they are in deep depletion… that’s a no-no. Instead they are evil — we must ditch them…
Enter renewable energy — transitioning to renewables is IMPOSSIBLE http://en.wikipedia.org/wiki/Cubic_mile_of_oil
Doesn’t matter. The Ministry of Truth overcomes this by pounding the barnyard animals with messaging (and catch phrases)… convincing them that we are on the path to a green wonderful future — where everyone gets to buy loads of stuff – HURRAH!!! HURRAH!!!
Let’s insert EVs here… ICE vehicles are EVIL. We must transition to EV’s … Zero Emissions. Well ya they are charged and manufactured with fossil fuels … But..BUT (hat tip to Jeff Green) … eventually we will phase out fossil fuels and go totally green.
Unfortunately… this is impossible http://en.wikipedia.org/wiki/Cubic_mile_of_oil
Governments know this … the bosses of governments (The Men Who Run the World) know this … of course they do — they are not stupid.
But they also know that they MUST ensure that the barnyard animals remain hopeful … positive… productive…
They cannot be allowed to understand that we are f789ed.
THE PERFECT STORM (see p. 59)
The economy is a surplus energy equation, not a monetary one, and growth in output (and in the global population) since the Industrial Revolution has resulted from the harnessing of ever-greater quantities of energy. But the critical relationship between energy production and the energy cost of extraction is now deteriorating so rapidly that the economy as we have known it for more than two centuries is beginning to unravel https://ftalphaville-cdn.ft.com/wp-content/uploads/2013/01/Perfect-Storm-LR.pdf
Do EV owners understand the epic amounts of fossil fuels are burned in the manufacturing and charging of their EVs?
Distribution of electricity generation worldwide in 2022, by energy source
https://www.statista.com/statistics/269811/world-electricity-production-by-energy-source/
Just asking for a dunce.
Do people understand that ‘fossil fuels’ don’t really come from fossils?
“Fossil Fuels” are continuously renewed from carbon escaping the Earth’s core. Fossil Fuels are renewable energy.
Too bad the oil is not renewing… I can list dozens of other countries where production is well past peak….
Meanwhile in Alberta – they steam oil out of sand… funny that … if all the other fields are renewing why do that????
Britain is producing the smallest amount of energy on record as a plunge in North Sea fossil fuels leaves the country more reliant than ever on imports. Read More
Mexican state energy company Pemex said its crude oil production in February hit its lowest monthly level in 45 years, as output of the key commodity remained far from the goals laid out by outgoing President Andres Manuel Lopez Obrador. Read More
Oil production in Alaska reaches lowest level in more than 40 years
Try to get your head around the idea that by 2027, US tight oil production might be 12 MM BOPD, not the 9 MM it is now, which is what cheerleaders say it will be, and that means we’ll actually have to find and extract 12 MM BOPD… before we can ever grow the new 3 MM. Man, that is a slew of new wells! Thats gonna take like…four times the HZ wells we’ve already drilled in the US.
Where? Read More
Just going by recent auto industry actions, EV demand seems to be in complete collapse. With Tesla, the First Mover Advantage window seems to be closing rapidly; so it will likely be an economy of scale issue for them in the future. Lots of failure and risk is integral with innovation, new products, new services, and new technology….
Reality is intruding on the hype now…
Worst thing Tesla ever did was sell cars to rental companies…
Because that allowed Mr Mainstream to test drive them… and that has put them off buying all EVs… and they are telling everyone who will listen and terrible the experience was.
This will be going viral and as you point out — the entire EV industry is likely to collapse.
I live next to Los Angeles. I see a lot of Tesla vehicles. I was at the water and power office yesterday. They had just installed a charger and re-striped some spaces next to it, possibly for more.
I have driven a rental car on a few occasions. It is awkward to drive any unfamiliar car. I drive an ICE vehicle. A neighbor owns a Tesla, but i have never asked them what they think of EV’s.
Why was the driving experience terrible? I’ve driven a Tesla and it was actually a very nice experience (loved the acceleration, one pedal driving was super easy to get used to and is now in my latest ICE car) with the only annoying downside being Tesla doesn’t support Sirius radio.
The *only* poor experience you’d have would be related to charging when renting since you aren’t charging at home when you are at a hotel and most people don’t know how to find chargers in other cities.
Seems the majority find the driving experience terrible…
That’s why Hertz is selling their entire EV fleet at a massive loss
https://www.reuters.com/business/autos-transportation/hertz-sell-about-20000-evs-us-fleet-2024-01-11/
And it’s why manufacturers are discontinuing EV lines… and why tesla sales are cratering https://www.ctvnews.ca/business/tesla-sales-fall-nearly-9-to-start-the-year-as-competition-heats-up-and-demand-for-evs-slows-1.6830217
This will get worse as word of mouth spreads and defeats the hype machine.
Also — watch as resale values continue to plummet resulting in less demand and further drops in resale values of used EVs… prices (and losses) on new EVs will also fall as they try to stimulate demand
Did I mention I was at the Lexus dealer in a major city a few weeks ago – they have not sold a single EV in 2024.
But hey – go ahead buy a coal/gas powered EV… in a couple of years you can park in the back yard and the kids can use it as a play house.
Musk’s reputation as a genius is really in doubt these days.
The business genius made $1 billion harvesting EV suckers.
Yep – there is money to be made if one can work out how to tap the massive pool of fools out there.
Curious how the EV taxi business works. You can’t make money if the car is stuck at a charger.
And then there is the EV freight business… half your payload is battery weight…
Who invests in this idiocy?????
Kamala Harris and Dr. Jill Biden make all White House decisions.
How is conceding a mass segment car to BYD going to work? Probably BYD is subsidizing low end cars with high margin ones, too, and so should Tesla. Musk should drop the useless albatross called starship and take care of business on Earth. The wasteland isn’t going to be saved by escape to Mars.
Actually Tesla was trying to subsidize low end cars with high margin expensive ones. That’s why the early Tesla’s cost so much because they were high end luxury cars for status seekers. Today Tesla at least makes luxury cars (they are roughly in the BMW/Audi/Mercedes class) to go along with the high end luxury ones.
But low ends cars aren’t feasible for Tesla yet and may never be given China is there first right now. China is going to own every entry level market in the world but the USA and possibly Europe because the rest of the world isn’t trying to protect their domestic auto industry so they are as happy to buy Chinese as they are American or Japanese or European. Labor costs and regulations are what’s preventing American and European car makers from building low cost EVs.
Once investors fully realize this, Tesla is just a vastly over priced stock based on the dream of licensing self driving software that looks increasingly unlikely to ever happen.
The regulations apply to all import cars into EU and NA, so the cost is even. Also, the production line is so automated that labor costs don’t matter that much compared to capital investment. High pressure presses that spit out whole body structures are even replacing dozens of robots. Reliable electricity supply and infrastructure are more important, but those also exist in China.
But if you mean low bar low cost car, then you can understand why Musk is flirting with India.
Tesla stock might have been all right considering fat margins that Tesla commanded, but I am not sure it still is after the huge gamble with Cybertruck.
Yes, NA and European customers will continue to pay high costs for cars because of the regulations and tariffs.
But everywhere else, they will get those same cars we pay $30K for something like $10-12K. I’m talking about Australia, India (will eventually become the #2 market), China (soon to be the worlds largest if its not there already), Indonesia and the rest of south east Asia, Africa, South America etc. The Chinese will own all those markets.
More importantly from a competitive point of view, if a US consumer has to spend 30K for an entry level car and an Australian consumer has to pay 12K then which consumer is 18K better off for the exact same thing? Which means they need less salary to have same lifestyle (making the rest of Australian goods more competitive that US made goods). It’s a spiraling effect.
Starship will drop the cost of putting a kilo into orbit to $200. SpaceX’s Falcon Heavy rocket does it at $1,600 now and the non-SpaceX rockets average at about $8,500. It will put 150 tons into orbit at $200/kilo. Let that sink in.
The-cost-of-spaceflight.png (1197×1515) (thesoundingline.com)
That Cybertruck is simply BUTT-UGLY!
Driving around in one of those … thinking one is so coooool…. and everyone is laughing at you…. hahahahaha
Yes, unusual, but there are engineering aspects to it. Cybertruck doesn’t have an exo-skeleton to support the skimpy trim which buckles and bends at a mere touch.
To make it, Tesla cooperated by IDRA of Italy to develop giga presses. Thick steel is hard to bend.
Musk has the attention span of a 3-year old. He’s constantly sidetracked by his impulsiveness instead of focusing on making his unreliable vehicles dependable.
That’s because he is not ‘real’.. he is a front man… he doesn’t manage any of these businesses.
He has been put in front of the world as a Techno Messiah … to make everyone believe that technology can solve anything. That creates hope in the future.
Very true. His hyperloop idea was silly. It reminded me of something out of an espidoe of the The Simpsons.
The guy is clearly great at marketing and PR though.
Many 1973 Olds Delta 88s would find their own way home from the bars. Used car classified ads would say “…runs great, some rust, a good drunk car.”
The US needs an 85hp $12000 ICE car for the masses. Gen-Z does not need the current offering. They need an entry level car with no frills.
My first car was $400: 1962 Chevy Impala SS with Chrome-Edged Bucket Seats and chrome-edged roll up windows.
A PIECE OF CRAP. I was UNDER IT more than IN it. Constant repairs.
NO MORE AMERICAN CARS FOR US.
After that, and an Olds Toronado, I switched to Volvo’s, Hondas, Toyotas, Infinities, Mercedes and Italian Motorcycles (Ducatis).
I had the same experience with union made Detroit iron.
Along with one of those $10000 Chinese entry level EV’s.
Then consumers can chose which they want based on what works best for them.
The problem is only China can deliver cars in the 10-12K price range and of course the unions howl and the governments put massive tariffs on those cars so that no one can get them for anything less than mid to high 20s prices.
A two seat bobsled ( driver in front, passenger in back) configuration might only need 50 HP. It would be a commuter car.