Elon Musk should’ve included cheap EVs in his Master Plan for Tesla. Instead, we got much more of everything.

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• The world is eager for affordable EVs but Tesla is not ready to deliver yet.
• Elon Musk's electric vehicle company hosted an investor day in Texas. It featured everything except cheap EVs.
• This is a major omission for a company struggling with fluctuating demand and rising competition.

Tesla fans have been on a rollercoaster ride for the past few months. So they can forgive Elon Musk for not posting as much to Twitter to update them about a long-anticipated, inexpensive EV model.

They got nothing at this week's Texas investor jamboree.

Musk, along with several other executives from Tesla's gigafactory Wednesday, presented what was widely expected. It placed front-and center an affordable version its expensive EVs. This showed that the company is serious about delivering affordable electric cars.

Instead of being the launch for part three of Tesla's Master Plan, the event turned into a four hour long slog where the focus shifted to vanity projects such as the Cybertruck, heat pump, autopilot crash numbers and powertrain refinements.

These details are fascinating, but do not hide the fact that cheap EVs – Musk's ultimate goal to make Tesla the world leader in clean-energy transportation – remain elusive.

The promises of affordable vehicles date back nearly 17 years, almost to the time when the billionaire launched his Master Plan. He urgently needs one, as his competitors are pursuing low-cost EVs.

The puzzling omission of a low-cost electric vehicle makes a puzzle

Tesla calls affordable EVs its "next generation platform" and they can satisfy two key pressures: satisfying consumer demand for low-cost clean-energy vehicles and Wall Street's expectations to increase production.

Musk repeatedly stated that he wants to make Teslas cheaper for consumers. This will allow everyone to buy EVs and accelerate the transition to clean energy. Investors will find Tesla a global success because of its low-cost EVs.

"The desire to own a Tesla Model S is very high." He said that the only thing that limits people's ability to buy a Tesla is their financial capacity. The lack of details about a low-cost EV was a curious omission in what was supposed to be a showcase for Tesla's offerings.

This is especially true in light of the high inflation and interest rates. According to S&P figures, EV sales increased 36% in 2022. However, Tesla's high prices could put a damper upon consumer appetite. The Model 3 sedan is Tesla's most affordable car at $43,000.

Investors could hear a collective grumble after the event. Tesla stock fell 5% in after-hours trade on Wednesday. It had also fallen to 6% in New York's regular trade on Thursday.

Tesla may have reduced the prices of some of its top models in the US and Europe by 20% last month, but a new model with a lower entry price would allow it to compete with traditional carmakers that are trying to offer cheaper alternatives.

The winner of the EV race will be determined by cheap EVs

Musk's right-handman at Tesla, Tom Zhu, announced that Tesla now has 4 million cars. This is a significant increase in the speed of Tesla's development. Compared to the 12 years it took for the first million Teslas to be built, the last one million took only seven months. The continued growth of the company will reduce costs.

To reach the production goal of 20,000,000 vehicles per year by 2030, we will almost certainly need to include a low-cost EV model.

Zach Kirkhorn, Tesla's Chief Financial Officer, stated that Tesla will increase efficiency and reduce costs to achieve the $150 billion-$175 billion investment required to reach this production target. The confirmation by Tesla of a Mexican gigafactory on Wednesday is a clear indication that the facility will be built.

However, Tesla is in a hurry and the lack of a low-priced car will only make it more expensive. Because of the expectation of delivering industry-changing achievements, Tesla is being priced like an EV maker. Its market cap is now around $600m, as its stock has dropped more than 35% in the past year.

It's all about establishing the ubiquitousness of iPhones. A cheap car is necessary to achieve that.

Tesla should take precedence over all other matters until then.

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By: hchowdhury@insider.com (Hasan Chowdhury)
Title: Elon Musk’s new Master Plan for Tesla should’ve introduced cheap EVs. Instead, we got a whole lot of nothing.
Sourced From: www.businessinsider.com/tesla-new-master-plan-elon-musk-everything-except-cheap-evs-2023-3
Published Date: Thu, 02 Mar 2023 21:12:58 +0000

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