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Tesla Abandons The All-New Model 2 In Favour Of "More Affordable" Vehicles

Tesla Abandons The All-New Model 2 In Favour Of "More Affordable" Vehicles
Using its current platforms and production lines, Tesla announced that it will deliver "new models" by early 2025, retreating from earlier ambitious plans to manufacture an all-new model that was anticipated to cost $25,000.
After months of decline, during which Tesla has faced with tough competition and dwindling sales, the promise of new goods on a speedier timeframe drove Tesla shares surging in after-hours trading. This was a much-needed lift. Despite Tesla's first-quarter results falling short of Wall Street's projections, the company nevertheless saw improvements.
Elon Musk, the CEO, stated that more cheap models would be available and that production would begin in early 2025, but he would not provide any other information about the new cars.
That comes well before the deadline Musk had originally set for the introduction of the brand-new, inexpensive Model 2, also known as the Model 2.
On April 5, Reuters exclusively revealed that Tesla had abandoned its plans for the Model 2, which was anticipated by investors to propel the company's development into a mass-market carmaker. Musk first responded to that article by writing on his social media site X, "Reuters is lying," without mentioning any errors.
Neither Tesla nor Musk responded to the Reuters story immediately on Tuesday.
Rather, they talked about unnamed new models that seemed to be separate items, but they didn't specify the number, kind, or intended price of any of them.
Tesla said that the new vehicles would utilise "aspects" of Tesla's present platform along with a next-generation platform and be constructed on the company's current production lines.
It warned that this approach would "result in achieving less cost reduction than previously expected," implying that buyers might have to pay more for the cars than the $25,000 that was originally projected for the Model 2.
According to the automaker, the new model plan will enable it to better manage capital expenditures in "uncertain times."
According to Tesla's engineering chief Lars Moravy, the business will forgo taking a chance on a "revolutionary" manufacturing method. Musk has already stated that the brand-new, inexpensive vehicle will serve as a testing ground for innovative production techniques.
According to Moravy, Tesla's work on the next generation of affordable cars is "transferable" to the cars the company is currently planning to launch in the first half of 2019.
"That engineering work, we're not trying to just throw it away," Moravy said. "We're going to take it and utilize it."
When an analyst asked whether the upcoming cars would be completely new models or just modifications to current ones, Musk failed to respond.
"I think we've said all we will on that front," Musk stated.
A bystander interpreted Tesla's remarks regarding the upcoming models as an affirmation that the company has put the Model 2 on hold.
"It seems clear that the new vehicle platform has indeed been shelved for now," said Sam Abuelsamid, an analyst at Guidehouse Insights. "The next gen vehicle was supposed to use fundamentally different production processes from current models. With no desire to spend billions on new production facilities or retool existing factories, it seems like we will see Tesla continue to build the current products."
The only mass-market Tesla models available at this time are the Model 3 and Model Y, which start at about $40,000.
A "purpose-built robotaxi product" that Tesla intended to develop via a "revolutionary" manufacturing technique was also mentioned, however a delivery date was not provided. According to a Reuters story published on April 5, Tesla intended to carry on working on a self-driving robotaxi using the same technology that it had been using to construct the Model 2.
A large portion of Musk's analyst call was spent laying out his audacious plans to expand Tesla's business into artificial intelligence, humanoid robots, and managing a fleet of millions of self-driving cars. These plans are predicated on software and technology that the manufacturer hasn't quite finished developing.
Tesla, according to Musk, "should be thought of as an AI robotics company," not a vehicle manufacturer.
The comment suggests that Tesla's fundamentals have changed significantly. The sales of electric vehicles accounted for more than 80% of Tesla's revenue during the first quarter.
Tesla's autonomous car fleet, according to Musk, will function "like a combination of Airbnb and Uber." Certain cars will be owned and run by Tesla, while other cars will be privately owned but rented out on Tesla's network.
The remarks mirrored one made by Musk during a 2019 presentation, in which he predicted that a "robotaxi network" will be operational by 2020.
After falling more than 40% so far this year, Tesla's market capitalization increased by almost $57 billion thanks to a 12.5% increase in shares during extended trading.
Despite its dismal quarterly earnings after the bell, investors were encouraged by Tesla's plan for more reasonably priced automobiles. However, several people were unconvinced.
Based on the number of rollout delays we've seen in the past, Tesla is starting to seem more like a show-me stock, according to Jay Woods, chief global strategist at Freedom Capital Markets. "If they can deliver, then this is a great development."
The more restrained approach might also spare Tesla from having to make significant expenditures on new production lines and a revised vehicle design.
In reaction to the sluggish growth of EV demand in the United States and the escalating competition from Chinese EV makers in the largest auto market in the world, Tesla has decided to hold off on expanding its manufacturing capacity. Similar choices have been made by General Motors and Ford Motor.
"Global EV sales continue to be under pressure as many carmakers prioritise hybrids over EVs," Tesla stated.
For the first time since 2020, when the COVID-19 outbreak impeded manufacturing and delivery, Tesla's quarterly revenue decreased.
In contrast to $23.33 billion a year earlier, the corporation reported sales of $21.3 billion for the three months that ended in March on Tuesday. LSEG data showed that analysts had projected $22.15 billion on average.
Due to further price reductions, Tesla's average revenue per vehicle delivered in the quarter decreased by over 5% from a year earlier to $44,926.
In the first quarter of this year, net profit was $1.13 billion as opposed to $2.51 billion the previous year.
At the start of the second quarter, Tesla said that it would reduce vehicle prices in important areas like the US, China, and Europe and lay off almost 10% of its global workforce.

Christopher J. Mitchell

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