By José Blanco
DETROIT (Reuters) -Henry Ford (NYSE:) democratized car ownership with his ultra-cheap, mass-produced Model T, and Elon Musk once promised to do the same for electric cars with a Tesla (NASDAQ:) that could sell for $25,000. .
Now, sources have told Reuters that Musk is shelving the idea of a bargain-priced Tesla for the masses in favor of autonomous robotaxis. Musk responded through a post on his x.com platform that “Reuters is lying (again).” He did not identify any specific inaccuracies.
Uncertainty over Tesla's plans and delays in EV projects from rival automakers present potential EV buyers and the Biden administration's environmental policymakers with difficult decisions.
“A critical precursor to the transition to electric vehicles is much greater availability of more models in more segments and at more price points,” said Peter Slowik, U.S. passenger vehicle leader at the International Council on Clean Transportation, a non-profit research group.
Tesla and Musk did not immediately respond to a request for comment.
Prices for new electric vehicles are falling in the United States. But it's still about $5,000 more than the average transaction price of $46,997 for a new vehicle, according to data from Cox Automotive.
Elon Musk set the goal in 2006 of building a profitable electric vehicle that Tesla could sell for $25,000, less than half the current average for electric vehicles.
But in the market, Tesla took advantage of its superiority in software-based features and charged premium prices until competition and slowing sales forced it to cut prices starting last year.
“I always thought Tesla should stay in that upper quadrant,” said Gary Silberg, head of KPMG's global automotive practice. Look at Apple (NASDAQ:), he said. “They don't make a $100 phone.”
It's not that cheap electric vehicles don't exist.
China's BYD (SZ:) sells a version of its Dolphin EV for $13,865, and BYD sells versions of its Seagull EV for just $9,700 in China, cheaper than many gasoline cars. Cheaper Chinese electric vehicles lack the range and features that Western markets demand, but American and European auto executives see these low-cost Chinese vehicles as a threat.
Chinese automakers are increasing exports and gaining market share in Europe, Latin America and Southeast Asia, all important markets for Tesla and established automakers.
“If you can't compete fairly with the Chinese around the world, then 20 to 30% of revenue is at risk,” Ford CEO Jim Farley said at an investor conference in February. Musk warned in January that Chinese electric vehicle makers could “demolish” their Western rivals.
Ford has launched what Farley called a “skunk works” project to develop a low-cost electric vehicle architecture. The project team is based in California, far from Ford's headquarters in Michigan.
US President Joe Biden and Republican presidential candidate Donald Trump say they will block access to the US market for Chinese vehicles. Biden has called for an investigation into whether Chinese vehicles pose a security risk.
But without cheaper electric vehicles, the Biden administration's goals of driving electric vehicles to more than half of new vehicle sales by 2030 could be at risk.
“As an industry, right now we are fighting to make electromobility affordable,” Stellantis (NYSE ) CEO Carlos Tavares said during a forum this week.
Affordability concerns haven't stopped automakers from eliminating cheap cars of all types from their new vehicle lines for years.
New vehicles priced under $20,000 accounted for just 0.4% of U.S. auto sales last year, down from 7% five years ago, according to data compiled by Edmunds.com analyst Jessica Caldwell.
General Motors (NYSE eliminated its cheapest electric vehicle, the Chevrolet Bolt, last year.
“If there really aren't many automakers coming out with a competitive vehicle in the low-cost market, it will start to generate more sympathy for someone else entering the market,” said Mark Wakefield, co-director of consulting firm AlixPartners. 'Automotive practice.
In the short term, many consumers will be able to find $25,000 electric vehicles on used car lots. A 2022 Tesla Model 3 Long Range sold for an average of $25,859 in March, according to Cox data.
(Writing by Joseph White. Reporting by Joseph White, Giulio Piovaccari in Milan and Abhirup Roy in San Francisco; Editing by Anna Driver)
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