Tesla raises doubts over EV Model T development By Reuters

joseph white

DETROIT (Reuters) – Henry Ford (NYSE:) democratized car ownership with the ultra-low-cost, mass-produced Model T, and Elon Musk promised to do the same for electric vehicles with Tesla (NASDAQ:), which could once sell for $25,000. I have done it. .

Now, sources say Musk is setting aside the idea of ​​an affordable Tesla for the masses in favor of self-driving robotaxis. Musk responded in a post on his X.com platform, saying, “Reuters is lying (again).” He did not confirm the specific inaccuracy.

Uncertainty about Tesla’s plans and delays in EV projects by rival automakers are forcing would-be EV buyers and environmental policymakers in the Biden administration to make difficult choices.

“An important precursor to the EV transition is the much greater availability of more models in more segments and at more price points,” said Peter Slowik, director of U.S. passenger vehicles for the International Council on Clean Transportation, a nonprofit research group. He said.

Tesla and Musk did not immediately respond to requests for comment.

New EV prices are falling in the United States. But that price is still about $5,000 higher than the average transaction price for a new vehicle, which is $46,997, according to Cox Automotive data.

Elon Musk set a goal of creating a profitable EV in 2006. A Tesla can sell for $25,000, less than half the current EV average.

However, in the market, Tesla leveraged its superiority in software-based features and charged premium prices until it cut prices starting last year due to competition and slowing sales.

“I always thought Tesla should stay in the upper quadrant,” said Gary Silberg, head of KPMG’s global automotive practice. Look at Apple (NASDAQ:),” he said. “They don’t make $100 phones.”

This does not mean that there are no cheap electric cars.

BYD (SZ:) in China is selling the Dolphin EV version for $13,865, while BYD is selling the Seagull EV version in China for $9,700. This makes it cheaper than many gasoline cars. The cheapest Chinese EVs lack the range and features Western markets demand, but auto executives in the U.S. and Europe see these low-cost Chinese vehicles as a threat.

Chinese automakers are increasing exports and gaining market share in Europe, Latin America and Southeast Asia, important markets for Tesla and established automakers.

“If we can’t compete fairly with China around the world, we’re putting 20 to 30 percent of our sales at risk,” Ford CEO Jim Farley said at an investor call in February. Musk warned in January that Chinese EV manufacturers could ‘annihilate’ their Western rivals.

Ford has launched what Farley calls a “skunk works” project to develop a low-cost EV architecture. The project team is based in California, far from Ford’s Michigan headquarters.

U.S. President Joe Biden and Republican presidential candidate Donald Trump both announced that they would block Chinese cars from entering the U.S. market. Biden called for an investigation into whether Chinese-made vehicles pose a security risk.

But without affordable EVs, the Biden administration’s goal of increasing electric vehicles to more than half of new car sales by 2030 could be in jeopardy.

“Currently, the industry is struggling to make electric vehicles affordable,” Stellantis (NYSE:) CEO Carlos Tavares said at a forum this week.

Concerns about affordability haven’t stopped automakers from excluding all sorts of cheap cars from their new vehicle lineups for years.

New cars priced under $20,000 accounted for 0.4% of U.S. auto sales last year, down from 7% five years ago, according to data compiled by Edmunds.com analyst Jessica Caldwell.

General Motors (NYSE:) discontinued its cheapest EV, the Chevrolet Bolt, last year.

“If there really aren’t that many automakers putting out competitive cars in the low-end market, you’re going to have more sympathy for someone else entering the market,” said Mark Wakefield, co-leader of consulting firm AlixPartners. ‘Car practice.

In the short term, many consumers will be able to find a $25,000 EV at a used car store. The 2022 Tesla Model 3 long-range model sold for an average of $25,859 in March, according to Cox data.

(Writing by Joseph White. Reporting by Joseph White, Giulio Piovaccari in Milan and Abhirup Roy in San Francisco; Editing by Anna Driver)