Apr 5, 2024 - Economy

Tesla's mass EV strategy in question

Photo illustration of Elon Musk with a car shaped thought bubble.

Photo illustration: Shoshana Gordon/Axios. Photo: Hannibal Hanschke/pool/Getty Images

A Reuters report Friday suggesting Tesla has abandoned plans to make inexpensive vehicles for consumers couldn't have come at a worse time for the company.

Why it matters: The picture for Tesla's future is growing murkier.

Context: An EV for the masses has long been a company goal.

  • But CEO Elon Musk's obsession with robotaxis repeatedly disrupted those plans, Axios' Joann Muller reports.
  • And based on Reuters' report, Tesla will pursue its robotaxi vision based on the platform for the inexpensive car.

The latest: Musk, about an hour after markets closed, said on X that the company will reveal its robotaxi on Aug. 8.

  • Shares jumped after the message, rising more than 4% in extended trading.

Yes, but: Tesla's current driver-assist technology is far from perfect, and other robotaxi companies have faced numerous challenges, Axios' Alex Fitzpatrick writes.

The big picture: Overall demand for EVs in the U.S. has slowed significantly — notching just 3.3% in sales growth in Q1.

  • Against that backdrop, it's no surprise then that inventory of Tesla's best-selling car, the Model Y, is at its highest ever, prompting steep discounts.
  • Earlier this week, the company also reported that total deliveries of its vehicles declined for the first time in almost four years.

Elsewhere in the world, cheaper EVs — from Chinese brands — are easier to find, but the Biden administration is taking steps to make it even harder for them to sell vehicles in the U.S., per Axios' Felix Salmon and Nathan Bomey.

The intrigue: One of Reuters' sources "cautioned that Tesla's product plans could change again based on economic conditions."

What we're watching: Tesla reports earnings April 23.

  • Its shares have fallen more than 33.6% since the start of 2024.
  • That includes today's intraday drop of 3.6% following the Reuters story.

Go deeper: "Unmitigated disaster": What's behind Tesla's Q1 delivery stunner

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