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Tesla to speed up rollout of cheaper electric cars

Pop star Katy Perry on Tuesday posted this selfie with her new Tesla Cybertruck on X, formerly Twitter. Tesla chief executive Elon Musk replied: 'Looks good'.
Pop star Katy Perry on Tuesday posted this selfie with her new Tesla Cybertruck on X, formerly Twitter. Tesla chief executive Elon Musk replied: 'Looks good'. - twitter.com/katyperry/

Tesla is speeding up plans for a range of cheaper cars as Elon Musk’s electric vehicle maker attempts to take on a wave of cut-price Chinese manufacturers.

The company said it would “accelerate the launch of new models… including more affordable models” with production starting next year.

Tesla’s shares rose by more than 5pc in after-hours trading despite the company reporting its biggest drop in sales in more than a decade.

Investors have been awaiting news of a cheaper electric car, which Mr Musk has suggested could cost around $25,000 (£21,500), but have raised concerns that his attention is instead focused on an autonomous “robotaxi”.

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Tesla said on Tuesday [last night]: “We have updated our future vehicle line-up to accelerate the launch of new models ahead of our previously communicated start of production in the second half of 2025.

“These new vehicles, including more affordable models, will utilise aspects of the next generation [manufacturing] platform as well as aspects of our current platforms, and will be able to be produced on the same manufacturing lines as our current vehicle line-up.

“This update may result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes… during uncertain times.”

It came as Tesla said profits in the first three months of the year fell by 55pc to $1.1bn, while revenues dropped by 8.7pc to $21.3bn - the biggest drop in more than a decade.

The company has been hit by wavering consumer demand for electric cars, higher interest rates making purchases more expensive and the closure of its German factory after an arson attack by environmentalists.

Its shares had fallen by more than 40pc this year, before last night’s results.

Tesla - a pioneer in electric cars - has been squeezed both by sagging consumer demand for battery-powered vehicles and increasing competition particularly from Chinese manufacturers.

At the end of last year it was briefly overtaken as the world’s biggest electric vehicle seller by volume by China’s BYD, although it reclaimed the title at the start of 2024. BYD and other Chinese sellers have dramatically brought down the cost of new electric vehicles.

Mr Musk said car manufacturers were pulling back on electric vehicles. “A lot of other auto manufacturers are pulling back on EVs and pursuing plug in hybrids instead. We believe this is not the right strategy, and electric vehicles will ultimately dominate the market,” he said.

He added that the company’s self-driving technology would soon surpass human drivers. “[It is] only a matter of time before we exceed the reliability of humans. And not much time at that,” he said.

Mr Musk said Tesla was in discussions with other car makers about licensing Tesla’s driverless technology.

Sales of electric cars in Britain fell to 15.2pc of all new vehicles registered in March, down from 16.2pc a year earlier. Earlier this month Tesla said it had delivered 386,810 cars in the first three months of the year, significantly less than the 422,875 a year earlier.

Last week, Mr Musk cut around 14,000 jobs - around 10pc of Tesla’s workforce. The cuts were the biggest in Tesla’s history and its chief executive called the move a “difficult decision”. In recent days the company has slashed prices of its new cars in an attempt to boost sales as well as dramatically cutting the price of its “full self-driving” software upgrade.

Mr Musk is betting heavily on driverless software and artificial intelligence in an attempt to revive sales.

He has said the company’s work on self-driving cars and humanoid robots could make Tesla the world’s most valuable company, although analysts had raised concerns that the efforts are coming at the expense of a long-awaited cheaper vehicle.

Mr Musk has promised to unveil the driverless car, which may come without a steering wheel or pedals, in August, despite questions about the capabilities of Tesla’s driverless software. The company has repeatedly updated its driver assistance software after enquiries by US safety regulators.

The company was last week forced to issue a recall for its Cybertruck pickup truck after concerns about defective brake pedals.

Tesla’s share slump has meant Mr Musk losing his status as the world’s richest man, with his net worth declining from $229bn to $164bn so far this year.

Last week he asked shareholders to reinstate a $56bn pay package that had been blocked by a Delaware judge, and to move the company’s incorporation out of the state to Texas.