Timetable for more affordable Tesla slips further

Elon Musk, CEO of EV pure play Tesla, has confirmed that any new product with a lower price tag from his firm will not become available this year, meaning his most ambitious previous forecasts on timeline are now off the table.   

Explaining his plans to develop a new vehicle line-up based more on Tesla’s existing technology and manufacturing processes, rather than making a new car from scratch using a so-called ‘unboxed’ construction method, on April’s Q1 analyst call, Musk said launch of new models “to be more like early 2025, if not late this year”. But, in its Q2 equivalent this week, he modified that timescale.

“We are on track to deliver a more affordable model in the first half of next year,” Musk told analysts.

And the Tesla chief ruled out giving any more details on what any of Tesla’s new offering might look like, meaning the question of how new the more affordable product will be — as opposed to just a stripped-back version of an existing Tesla — hanging once again. “We want to limit product announcements to when we have a specific product announcement event, rather than earnings calls,” Musk explained.

“We have to be careful of the Osborne effect here. If you start announcing some great thing, it affects our near-term sales.”

We will have to wait for the next of these launches, as Musk also confirmed media reports that the unveiling of his Tesla’s new robotaxi had been pushed back two months from early August to 10 October. “I wanted to make some important changes that I think would improve the vehicle,” the Tesla chief said.  “Moving it back a few months allowed us to improve the robotaxi, as well as add in a couple other things for the product unveil.”

Big in Texas

One Tesla project which is “nearing completion” is the South expansion of the firm’s Giga Texas facility, which “will house our largest training cluster to date”, according to Musk. “That South extension is what will house 50,000 H100s and we are beginning to move the H100 server racks into place there,” he adds.

The firm also foresees soon hitting a milestone on its in-house 4680 battery cells. “We currently produce more than 1,400 Cybertrucks of 4680 cells per week, and we will continue to ramp output as we drive cost down further towards the cost parity target we set for the end of the year,” says Lars Moravy, Tesla’s vice-president for vehicle engineering.

“We have built our first validation Cybertruck with dry cathode process made on our mass production equipment, which is a huge technical milestone, and we are super proud of that. We are on track for production launch with dry cathode in Q4, and this will enable cell cost to be significantly below available alternatives, which was the original goal of the 4680 programme,” Moravy continues.

But Musk’s February promise of an unveiling of Tesla’s new Roadster sports cars at the end of this year also seems to have slipped. “With respect to Roadster, we have completed most of the engineering,” the Tesla chief says.

“I think there are still some upgrades we want to make to it, but we expect to be in production with Roadster next year,” he continues.

Lower tariff

One short-term boost to Tesla’s fortunes to look out for could be a lower tariff on China-made vehicles into Europe once the European Commission announces a company-specific rate for the firm. “While we were not picked up in our individual examination in the first round, they did pick us up in the second round,” Musk explains. “They visited our factory. We worked with them, provided them all the information.

“We are confident that we should get a better rate than what they have imposed for now,” he says, while stressing that it is still a fluid situation. The firm has nonetheless been “adjusting our import strategy out of China into Europe”.

It is still importing Model 3s out of its Shanghai plant into Europe. It has made changes, though, such as building right-hand drive models in Berlin and delivering them to the UK, while its German plant is also exporting to Taiwan, Musk notes.

Still the big bet

But Tesla continues to stress that autonomous driving (AD), rather than producing and selling new cars, is the key long-term driver of its growth. But, while lauding improvements it has made to its Full Self-Driving (FSD) advanced driving assistance systems (ADAS) technology and increasing customer demand for the product, it is noticeably coy on giving concrete numbers on its uptake.

“We have made a lot of progress with Full Self-Driving in Q2 and, with version 12.5 beginning rollout, we think customers will experience a step change improvement in how well supervised full self-driving works,” Musk says. “I still find that most people actually do not know how good the system is, and I would encourage anyone to understand the system better, to simply try it out and let the car drive you around.

“I think will be a massive demand driver, even supervised full self-driving will be a massive demand driver. And as we increase the miles between intervention, it will transition from supervised full self-driving to unsupervised full self-driving, and we can unlock massive potential,” he predicts.

When might this transition be expected? “You could do unsupervised possibly by the end of this year,” says Musk. “I would be shocked if we cannot do it next year. So next year seems highly probable to me.”

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In the meantime, the firm confirms that supervised FSD sales have gone up, but that price cuts to the service have been a factor in that. “Since the revision of FSD pricing in North America, we have seen production rates increase meaningfully and expect this to be a driver of vehicle sales as the feature set improves further,” says Tesla CFO Vaibhav Taneja.

But the finance chief will not be drawn on customer numbers. “We have seen a meaningful increase. I do not want to get into specific because we started from a low base, but we are seeing encouraging results,” he says.