The global slowdown in demand for electric vehicles, as well as a flurry of cheap, but modern and high-quality electric vehicles from China, prompted Tesla to accept A difficult decision: the budget electric car project, which was supposed to cost about $25,000, has been canceled and all work on it has been stopped. Instead of a cheap electric car, Tesla will concentrate its efforts on developing a fully driverless taxi, which Elon Musk has long dreamed of.
We shared details about the budget electric car project last fall in a separate article in connection with the release of the book “Elon Musk” by the famous American biographer Walter Isaacson. Let us briefly recall here that initially Musk wanted the budget model to be completely unmanned and have no steering wheel or pedals at all – such a model was supposed to revolutionize the market and become a global bestseller.
Due to the impossibility of legalizing a full-fledged autopilot, the budget electric car project was paused at some point, then Tesla top managers persuaded Elon Musk to release a budget electric car without a full-fledged autopilot, but with a cool design. Musk agreed and earlier this year promised that an electric car priced at $25,000 would hit the market in 2025. Previously, Tesla, in light of preparations for the release of a budget model, announced a new production principle that would reduce costs by 50%.
Today, Reuters, citing several insiders, reported that last month Tesla’s budget electric car project was discontinued by directive. Within the company, this project was carried out under the index NV91; when working with suppliers, the index H422 was used.
If the NV91/H422 model was supposed to enter the world market next year, then it was already at a high degree of readiness and with an approved design, however, Tesla top management and Elon Musk personally realized that in its current form the NV91/H422 model would not achieve the desired result success, because, firstly, it is unclear how long the decline in the electric vehicle market will last, and, secondly, Chinese companies are already offering high-quality electric vehicles at even lower prices. The main irritant for Tesla here is BYD, which produces one after another new electric cars with a price of 10,000 – 14,000 dollars. Not a single Western company today is able to produce electric cars at such low prices.
In the first quarter of this year, Tesla sold 386,810 electric vehicles worldwide, down 8.5% from sales in January-March 2023, a fairly serious decline after a long period of strong growth, and this decline is likely to continue in the coming months. In the Chinese market, Tesla is taking unprecedented measures, such as interest-free loans for customers, to flatten the sales curve.
Reuters sources report that Elon Musk, in fact, has returned to the original concept of a budget electric car, that is, he intends to make it completely unmanned and promote it as a service through taxis and car sharing. Some developments from the NV91/H422 model will certainly be used in the unmanned taxi project, but the design will change a lot, and most importantly, it is unclear when, in fact, the unmanned taxi might enter the market.
Elon Musk has long been obsessed with the idea of a self-driving car: in the fall of 2022, Tesla even de facto released a commercial release of the “full autopilot” FSD (Full Self-Driving), although from a legal point of view it is not such. Insider data suggests that the development of Tesla's autopilot is not going as successfully as the company is trying to make it out to be: the lives of thousands of people who agreed to become voluntary beta testers were in serious danger.
Even if full autopilot worked flawlessly, it is currently impossible to legalize it due to insoluble ethical and legal contradictions. The maximum that the modern world can offer in terms of unmanned vehicles is the third level according to the SAE classification, and even then with a lot of reservations and restrictions. Cars without a steering wheel and pedals still remain a pipe dream, but Elon Musk still intends to create a miracle – sooner or later.
We would like to add that in general the automotive industry has sharply cooled down to the idea of a full autopilot in recent years. At the beginning of this year, it became known that General Motors Corporation, which also dreamed of an unmanned taxi, had stopped developing its advanced Ultra Cruise autopilot.
Update from 04/06/2024
Elon Musk called the material published by Reuters a lie and announced the premiere of an unmanned taxi (Tesla Robotaxi) on August 8 this year. Note, however, that Musk did not comment on the fate of the budget electric car. The announcement of the robotaxi premiere inspired investors, the price of Tesla shares began to rise, but let us remember that five years passed between the premiere of the Tesla Cybertruck and its launch into production. The second generation Tesla Roadster, announced in 2017, has not yet been presented in production form.
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