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Tesla CEO Elon Musk is waving while holding his son in one arm while visiting the Tesla Gigafactory in Germany last March.
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Ebrahim Noruzi/AP
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Tesla CEO Elon Musk is waving while holding his son in one arm while visiting the Tesla Gigafactory in Germany last March.
Ebrahim Noruzi/AP
After a barrage of bad news and plummeting profits from Tesla, CEO Elon Musk sought to reassure investors on Tuesday that the innovative electric car company is still on a long-term growth path thanks to AI and self-driving cars.
“We’re adding an actual ‘car’ to ‘car,’” Musk told the executive, laughing.
Tesla CFO Vaibhav Taneja later added, “The future is really bright.” “We just have to get through this and get there.”
But “this period” is a tough one. Declining sales and Tesla's repeated price cuts led to a 55% drop in profit for the quarter compared to a year ago. A number of top executives have left the company, including its head of investor relations, who announced the news on Tuesday's earnings call. Tesla is laying off more than 10% of its global workforce and executives are frustrated as investors continue to press for more details about its long-promised $25,000 vehicle.
In defending the company's performance, Musk and other executives pointed to broader challenges in the EV industry as well as headwinds such as the arson attack at Tesla's Berlin plant and the cost of the Cybertruck launch. They also emphasized that they still see a bright future for electric vehicles.
The future of $25,000 cars is bleak
In 2020, Tesla executives provided detailed arguments for why they believe they can create a “powerful” EV priced at $25,000. “This has always been our dream since the beginning of the company,” Musk said. It's also a top priority for many investors and car buyers.
Tesla's cheapest Model 3 currently starts at around $38,000.
How was Tesla able to lower the price to $25,000? The plan involved casting large portions of the car as single parts, similar to how toy cars are manufactured. Tesla executives later said they were rethinking the entire way their assembly line worked as part of cracking the code for both these affordable mass-market vehicles and custom robotaxis.
Now Tesla has essentially confirmed reports that it is moving away from the mass-market vehicle portion of the plan.
However, Tesla insists that the “more affordable” vehicles will continue to be available before the second half of next year using existing manufacturing lines. The “revolutionary” manufacturing process is now dedicated solely to robotaxi.
How much cheaper does “cheaper” mean? It's not clear. The company said in an investor presentation that the cost savings may be smaller than previously expected.
When the long-promised $25,000 vehicle fell behind schedule, executives continued to turn their attention to their equally long-promised robotaxi vision.
“The way we think about Tesla is almost entirely about solving autonomy and being able to turn on autonomy for a huge fleet,” Musk said when asked about the $25,000 car.
“I think we’ve said all we have to say on that front,” he told another.
Robotaxis is almost there — again
For years, Musk has been promising that an army of driverless Tesla robotaxis carrying passengers would be just around the corner.
On Tuesday, he recommitted to that vision, promising that in August Tesla would unveil the “Cybercab,” a vehicle custom-built for taxi services as part of a fleet that could include Tesla owners sending their cars out to make money. La Airbnb.
Today, with expensive software add-ons, Teslas can drive themselves through city streets, stopping at traffic lights and navigating turns without human input. maximum of that time. However, attentive drivers should still sit in the front seat to take over the driving when needed. Tesla recently started calling this software “Fully Self-Driving (Supervised).” This is an admission that it is not truly autonomous driving.
And operating a profitable robotaxi fleet is not just a matter of technology. As GM's Cruise and Google's Waymo can painfully demonstrate, it requires working productively with government regulators and gaining and maintaining public trust.
“If there was conclusive data showing that self-driving cars are safer than human-driven cars, I don’t think there would actually be a significant regulatory barrier,” Musk said, arguing that human drivers would be as outdated as human elevator operators.
Musk also sketched a plan to utilize idle Teslas as a distributed AI computing business, which is similar in concept to Amazon Web Services cloud computing service.