Accessibility links

Breaking News

Tesla Reported to Roll Cheaper EV

FILE: A Tesla Model S electric car is seen at its dealership in Seoul, South Korea July 6, 2017. The Model S is at the top of the Tesla Model line - Musk says he wants to build a model in the USD$25,000 price range.

Tesla Chief Executive Elon Musk has for years teased the world with his dream of an affordable electric car. This week, industry-watchers say they hope this week will bring the unveiling of production plans for a cheaper EV car.

Musk said last year he shelved the plan for a $25,000 car, known as Model 2, due to the expense of batteries to power it.

But that low-priced car is expected to be the centerpiece of Musk's 'Master Plan Part Three', which he will offer at an 'Investor Day' on Wednesday, along with plans for factory expansion and capital spending.

Clues offered by Musk about the Model 2 leave much to the imagination. Making a compelling $25,000 electric vehicle "has always been our dream from the beginning of the company," he said at a presentation about batteries in 2020.

A recent Tesla engineering video showed a small car with typical Tesla curves that was assumed by company watchers to be a Model 2 sketch.

Musk said last year that the new master plan is about how to "scale" and get all the materials needed to make batteries for vehicles and energy storage systems.

The fundamental determinant "of the rate at which we can transition to sustainability is the rate at which we can grow the output of lithium ion batteries," he said in the interview.

Although there is some sign sky-high lithium prices may be easing, Musk has said lithium costs could force Tesla to make its own supply of the electric vehicle battery metal.

Battery production also is an issue.

Musk in 2020 forecast his company in 2022 would produce 100 gigawatts of newer generation, lower cost batteries, enough to power about 1.3 million Tesla Model Ys, but the December production rate of the batteries, called 4680s, was enough for just over 50,000 vehicles a year.

Batteries are also likely to figure in Musk's plans for a "fully sustainable energy future" outside the car.

He may also discuss solar power generation and battery energy storage - which he has said are two other pillars to a sustainable energy future.

Investors will look out for any hints of demand, plans to ramp up production of the Cybertruck, which Musk said will start volume production next year, and locations of new Tesla factories, with Mexico, Canada, Indonesia and South Korea all cited as potential candidates.

Musk says he expects the new car platform to be rolled out in 2025 at the earliest, which would still be years faster than the typical auto industry development of a new vehicle.

But an auto industry analyst doubts that timeframe.

"The formula for decoding Musk is pretty simple. Take whatever time frame he has, and multiply it by two," said Gene Munster, Managing Partner at Deepwater Asset Management, which owns Tesla shares.