Tesla Co-Founder Laments Scrapping of Low-Cost Car Plans

Martin Eberhard, a co-founder and former CEO of Tesla, expressed disappointment on Tuesday over the automaker’s decision to scrap its plans for a low-cost car, citing intense competition in China. 

Eberhard made these remarks at the HSBC Global Investment Summit in Hong Kong, following Reuters’ report detailing Tesla’s abandonment of its affordable vehicle project.

Abandonment of Affordable Car Goal:

The cancellation of Tesla’s budget-friendly car is a stark departure from the company’s long-standing objective, a mission that CEO Elon Musk had once passionately championed. 

Musk’s vision, outlined in Tesla’s initial “master plan” in 2006, was to prioritize the production of luxury models to fund the development of an affordable electric vehicle for mass adoption. This decision to abandon the low-cost car goal is a significant shift in strategy.

Significance for the Chinese Market:

Eberhard noted that China’s decision to scrap the low-cost Model 2 program presents an opportunity to assert its influence in the electric vehicle sector. 

The move reflects the evolving dynamics of the Chinese automotive market and underscores the competitive landscape Tesla faces in the region.

Financial Implications and Product Strategy:

Tesla’s decision to forego its entry-level vehicle, which was anticipated to be priced around $25,000, is a notable shift. This decision contrasts with its current lineup, with the cheapest Model 3 sedan priced at approximately $39,000 in the United States. 

Despite the setback, sources revealed that Tesla remains committed to developing self-driving robotaxis based on the same platform initially intended for the low-cost car. This strategic shift could have significant financial implications for the company.

Response from Tesla:

As of the reporting time, Tesla had not offered an official statement regarding canceling its affordable car plans or future product strategy.