Is Tesla’s High Growth on Hold Until the Arrival of the Entry Model?

Despite the excitement surrounding Elon Musk’s Tesla, the company’s high growth rates may not make a comeback until the arrival of its highly anticipated entry-level model, which is still in development. The upcoming release of the Cybertruck, the first new Tesla since the Model Y launched in 2020, has been a significant source of investor hope. However, Musk himself has cautioned that the production of the stainless-steel pickup has proven to be more complicated than expected.

In fact, Musk recently stated that it will likely take until mid-2023 before Tesla can achieve a daily production rate of 250,000 Cybertrucks. Even then, the output is expected to fall below that number, at least until 2025. These production challenges mean that Tesla will continue to heavily rely on its existing lineup of older models, such as the mid-size Model 3 sedan and the Model Y crossover, which currently make up the majority of Tesla’s sales.

To maintain sales and cater to a broader consumer base beyond early adopters, Musk has had to slash prices and sacrifice profitability. This strategy acknowledges that Tesla is currently in an intermediate low-growth period. The pressure is now on Tesla’s next-gen platform, which is expected to support a range of new models, including a dedicated robotaxi van and a $25,000 car.

Although the timeline for the launch of the $25,000 model remains uncertain, Musk has made it clear that the low-cost car will not be produced at a new factory in Mexico. Instead, speculation suggests that Tesla’s underutilized factories in Texas and Germany may begin producing the model before the new Gigafactory is operational.

While Tesla has not yet revealed the design for its low-cost car, it is apparent that Musk is wary of customers postponing purchases in anticipation of a more suitable Tesla model. Therefore, he remains heavily reliant on the success of the Model 3 and Model Y to sustain sales in the interim.

FAQ

When will Tesla’s entry-level model be released?

The exact release date of Tesla’s entry-level model remains unknown. However, estimates range from two years to 12-18 months, depending on different sources. Tesla has not yet provided a specific timeline for the launch.

Will Tesla’s production challenges affect its growth?

Yes, Tesla’s stainless-steel pickup, the Cybertruck, has encountered engineering difficulties that have hampered production. As a result, Tesla’s high growth rates are expected to be hindered until the arrival of the entry model and the subsequent launch of other new vehicles on the next-gen platform.

What models are Tesla currently relying on for sales?

Tesla is heavily reliant on its existing range of models, particularly the mid-size Model 3 sedan and the Model Y crossover, which together account for over 90% of the company’s sales. To maintain sales, Tesla has had to reduce prices and sacrifice profitability.