Tesla’s new growth plan is centered around mysteriously compelling cheaper models.

Tesla has recently undergone significant transformations, attributing them to the “pressure” on electric vehicle (EV) sales. This shift in direction has led to an accelerated product roadmap, with plans now focusing on the introduction of more affordable models slated for launch next year.

There’s even speculation, albeit cautious, that these models could hit the market as early as the close of 2024, according to statements from Tesla CEO Elon Musk. The unexpected announcement spurred a remarkable surge in Tesla’s stock price, climbing over 11% during after-hours trading on Tuesday. Investors eagerly awaited further details during a call with Tesla executives, yet specifics remained undisclosed.

This strategic pivot follows a startling report from Reuters in April, alleging Tesla‘s abandonment of efforts toward a low-cost, next-generation vehicle. Originally intended to share the EV platform being developed for Tesla’s purported robotaxi, this next-gen car was projected for potential release as soon as late 2025.

Despite Musk’s dismissive response to Reuters’ claims, subsequent reports from both Electrek and Bloomberg News suggest a delay or reduced emphasis on the development of this particular EV within the company. Amidst speculation and skepticism, Musk took to social media platform X to announce Tesla’s plans to unveil the robotaxi on August 8th.

In its recent less-than-stellar first-quarter earnings report, Tesla unveiled significant updates to its future plans amidst a 55% year-over-year decline in profits. These updates entail a shift in strategy towards hastening the introduction of new vehicle models, aiming to precede the previously communicated production start in the latter half of 2025. Notably, the forthcoming lineup will include models positioned as “more affordable,” marking a departure from Tesla’s traditional high-end offerings.

Tesla’s approach to these new models involves leveraging existing production lines while integrating elements from both the in-progress next-generation platform and current platforms. This strategy not only expedites the development process but also maximizes the utilization of ongoing R&D efforts.

Recent reports from Bloomberg News shed light on Tesla’s focused efforts on refining and advancing the Model Y and Model 3, drawing heavily from the innovations of the next-gen EV. This emphasis suggests Tesla’s commitment to enhancing its popular offerings with cutting-edge technologies and manufacturing processes.

Despite the anticipation surrounding Tesla’s updated roadmap, CEO Elon Musk opted to withhold detailed discussions until the slated event on August 8th, where the company plans to reveal its much-anticipated “Cybercab” or robotaxi. During the investor call, Musk remained elusive on further inquiries regarding the company’s strategic direction, hinting that prior disclosures have covered what they intend to share.

However, Tesla’s Vice President, Lars Moravy, provided additional insight into the transition to the new platform, acknowledging inherent risks while underscoring the potential benefits. Moravy highlighted Tesla’s intent to capitalize on ongoing engineering efforts by swiftly integrating them into new products, signaling a commitment to innovation and efficiency within the company’s development processes.

Cost versus growth

Tesla has been diligently working to slash manufacturing costs for its next-generation electric vehicle (EV) by a remarkable 50% compared to the platform supporting the Model 3 and Model Y. However, the company acknowledged on Tuesday that transitioning to a strategy that amalgamates next-gen technologies and processes with existing platforms and manufacturing lines would inevitably diminish some of these anticipated cost savings.

Despite this setback, Tesla remains optimistic about its growth prospects. The company asserts its capability to double the production volume achieved in 2023, which stood at approximately 1.8 million vehicles, by the year 2025.

Although the cost savings on the vehicles might not be as substantial, Tesla foresees significant advantages in scalability and efficiency. By leveraging existing production infrastructure, Tesla can sidestep the need to construct entirely new production lines for its forthcoming lineup of enigmatic vehicles.

Consequently, the company has opted to decelerate its efforts on a new factory in Mexico, originally earmarked for the production of the next-gen EV and robotaxi.

However, Tesla’s ambitious growth projections come amidst lingering uncertainties and challenges. Despite years of anticipation, Tesla has consistently fallen short of its target for 50% annual growth, a trend that is expected to persist this year as the company anticipates “notably lower” growth rates. Moreover, Tesla’s assertion of its ability to roll out this new product lineup coincides with substantial layoffs across its global workforce.

Yet, CEO Elon Musk reassured stakeholders during the investor call, emphasizing that the company remains steadfast in its commitment to progress. Musk characterized the current restructuring efforts as a necessary step to reorganize Tesla for the next phase of growth, following a prolonged period of prosperity.