Elon Musk promises that more affordable Tesla is coming. Again.

Tesla boss Elon Musk has reiterated that his company is working on a new range of more affordable electric cars. Speaking at a press conference to announce financial results for the company, Musk confirmed that its designers and engineers had started work on a new platform that would underpin the next generation of cars that will sit below the current Model 3 and Model Y. 

Addressing investors, Musk said: “It’s the primary focus of our new vehicle development team, obviously. At this point, we are done with the engineering for Cybertruck and for Semi. So, it’s obviously what we’re working on, the next-generation vehicle, which will be probably be about half the cost of the 3 and Y platform. It will be smaller, to be clear.” 

While this comes as potentially good news to drivers wanting to take advantage of Tesla’s technology and still sector-leading public charging network at a lower price point, this isn’t the first time that Musk has promised a cheaper Tesla. In a speech at the brand’s Battery Day event in 2020, Musk confirmed that Tesla was in the process of developing a cheaper model and that it would arrive as early as 2023. However, during an earnings call in January 2022, Musk told investors that its $25,000 car had fallen off the drawing board, saying: “We’re not currently working on the $25,000 car. At some point, we will, but we have enough on our plate right now.”

Electrifying,com's impression of what a sub-Model 3/Y Tesla could look like when it arrives

At the time, Musk claimed that developing self-driving technology and robo-taxis were more important to the brand, commenting: “Really, it’s really the thing that overwhelmingly matters is when is the car autonomous? I think, at the point in which it is autonomous, the cost of transport drops by, I don’t know, a factor of four or five.”

Now, however, the budget Tesla appears to be back on the agenda. With the development of the Tesla Semi (lorry), much-delayed Cybertruck now almost complete, the affordable Tesla will only be vying for development time with Musk’s latest project - the Optimus humanoid robot. Tesla showcased an early prototype in August at its self-styled ‘AI Day’, but received a lukewarm reaction from robotics experts, with many pointing out that both Honda and Toyota had delivered more sophisticated and capable designs nearly a decade ago. 

Should Tesla’s plans for the £25,000 car come to fruition, it is doubtful that a production version will be available much before 2025. The Model 3 was hit by significant delays in its production ramp and the late arrival of the Cybertruck (now scheduled for launch in 2023 - four years after being unveiled). Tesla also has a production issue with all of its factories already up to capacity building Model 3 and Model Y models. A new, more affordable model is likely to produced in huge numbers, which is likely to mean the building of more factories. 

In terms of price, if Tesla remains true to its promise and introduces an entry-level model for $25,000 in the US, that could potentially mean UK buyers could buy into the Tesla experience for under £30,000. As US prices don’t take into account VAT, so a direct conversion with VAT means that prices could start at low as £26,500. 

Tesla's much-delayed Cybertruck has prevented Tesla from starting on its smaller car plans