Tesla at 25,000 Euros: Stop or Continue?

The democratization of the electric car depends on a general drop in prices. But Tesla may give up on leading this battle.

Reuters made waves this week, much to the dismay of Elon Musk and the stock markets. Citing “three sources familiar with the matter,” the news agency claims that the American company would abandon its plan to produce a low-cost electric vehicle and instead focus on manufacturing autonomous robotaxis: Tesla will unveil the autonomous Robotaxi on August 8, 2024.

Elon Musk was quick to react, tweeting a brief and furious message. “Reuters is dying,” he claimed, citing a drop in traffic to the news outlet’s website. Don’t mess with Uncle Elon! However, you’ll notice he doesn’t deny it…

Tesla’s stock plunged as much as 7% after the initial report before finishing down 3% following Musk’s denial. These fluctuations are quite common for a stock that lives and dies by the whims and statements of its CEO.

In January, Musk had told investors that Tesla planned to begin in the second half of 2025 the production of an affordable model costing less than 25,000 euros at its Gigafactory in Austin, Texas, and in Berlin, Europe. This announcement aligned with what Elon Musk has always asserted since launching his Tesla brand. For him, Tesla manufactures luxury vehicles only to one day offer the masses an affordable car benefiting from the expertise gained in the high-end segment.

What if Reuters made a gift to Elon Musk and Tesla?

One thing is certain: Reuters’ sources can be considered ultra-reliable, even if the cited messages give a vague impression, suggesting a suspension of development for a variant rather than a total stop of the program. It is true that the question of the relevance of a Tesla at 25,000 euros may arise while the prices of the Model 3 and Y continue to decrease to approach 35,000 euros. On the other hand, Dacia and Citroën have made insane financial efforts to develop cars costing less than 20,000 euros with the Spring and the ë-C3… only to end up competing with a qualitatively superior BYD Seagull priced at 10,000 euros. This might discourage any goodwill.

Moreover, Elon Musk has always claimed that he favors the path of the autonomous car and especially the Tesla Robotaxi, which would render the car unnecessary, regardless of its price. This announcement from Reuters ultimately gives him the opportunity to throw a major fit, sulk a little, and come back to say that if that’s how it is and if nobody believes in the Model 2 Tesla, he will drop it for good.