3 Very Good Critiques of Tesla’s Affordable Model Expectations
Last Updated on: 20th July 2025, 12:09 am
The first half of 2025 is now over — it has been for almost three weeks — and we’re yet to see the more affordable models Tesla said would start production in the first half of 2025. What is going on with those, who knows? I wrote about that and threw around a lot of questions about these models and Tesla’s future a few days ago. Unsurprisingly, there were many good responses from readers. A few of them triggered this follow-up article. I also went back to an article from 4 months ago about these more affordable models because I realized I never read through the comment thread on that one. I’ve got a comment to include from that one as well.
First up, reader “dashpol” offered a solid critique of Tesla potentially developing significantly more affordable models and trying to financially benefit from that:
“I think ‘more affordable models’ never made much sense as a strategy for Tesla anyway. The Model 3 is already a smallish car by US standards, and cutting off the trunk to make a hatchback wasn’t going to save much money (and would make range worse). They’ve already stripped the car bare of e.g. driver controls, so where else are they going to make savings?
“They’d have to drop price by something like £10k in the UK to compete against the already-existing hatchbacks in that size category, taking into account the big discounts available on e.g. VWAG or Renault stuff.
“So if this wouldn’t work in Europe or the US, where are Tesla expected to sell a lot of cheaper small cars? Are they meant to be competing with the incredibly cheap small cars in China?
“The whole point of Tesla’s cars was the S3XY stuff; basically fast sleek cars that would make a man-child excited. And all the tech-heavy self-driving computer-on-wheels business. Making a pragmatic small hatchback … just seems philosophically at odds with the aggressive tech-bro attitude, and not really a US thing at all. Those kind of folk refer to hatchbacks as ‘penalty boxes’.
“Plenty of bigger vehicles Tesla could have been making based on the Y platform. Station wagons, vans, a reasonably affordable 3-row SUV, a more sensible pickup. An actual commercial light truck.”
To be honest, this is the comment that triggered this followup article. That’s a perfect critique in my eyes. Digging down into individual markets, it gets hard to see how this is going to be a success for Tesla. Add in the key elements of the Tesla brand and who Tesla vehicles typically appeal to, and it gets even harder to see how more affordable models are going to be a big hit. Though, perhaps there’s still a market for cheaper Teslas for people who are in love with the brand but still can’t stretch their finances for a Model 3 or Model Y. Well, then you run into that other business problem, as Geoff Willingham explains…
“Regarding the need to not cannibalise the Model 3/Y sales — I think that’s unavoidable.
“For a long time (especially when the 3 first launched) there was talk of people making the ‘Tesla Stretch’ — folk spending more than they were planning in order to get a Tesla, due to the lower running costs and overall reduce lifetime costs, etc.
“I’m not sure how many are still making that ‘Tesla Stretch’ (party due to the tarnishing of the brand reputation, partly due to the increase in viable alternatives at a lower cost — especially outside the US) — but any form of ‘cheaper’ Tesla will likely cannibalise those ‘Tesla Stretch’ sales.”
Good point! Tesla is currently struggling with the fact that sales are dropping for its current models. The company wouldn’t be seeing a quarterly profit this year if not for regulatory credits (which Trump is going after). If Tesla releases new, cheaper models, it will already be a struggle to make the company’s money back on them, but beyond that, these models could put an even more serious dent in Model 3 and Model Y sales — which could lead to a real company crisis! Hmm….
“UjiBebek” probably says it better than me:
“If Tesla can’t even make money today selling Model Ys and 3s, how may it possibly make any money in the hypercompetitive segments of the small SUV and hatch?
“Excluding the regulatory credit and the $7,500 incentive from Tesla’s income statement, and excluding the bitcoin gain Tesla will record in the second quarter of 2025, it’s clear the company is losing money.
“There was a time when Tesla delivered 30,000 Model S and X combined per quarter. Now, including the Cybertruck, it struggles to deliver 10,000. Selling 30,000 Model S and X generates the same revenues of 100,000–130,000 ‘affordable’ models.
“Tesla has lost the race to become the world’s largest manufacturer of BEVs. The next few years will be brutal, and only a healthy P&L statement will ensure its survival.”
Oy, yes, and I forgot about the bitcoin profits! Tesla is really struggling with its core model sales as things are. Isn’t adding some cheaper models a serious risk for the company’s current model sales targets and financial needs?
And on that last line, I do think there was a window when Tesla could have released cheaper models, perhaps not ramped up Model 3/Y production so much, and achieved even higher sales than it has — while making it much harder for other automakers to outcompete it in that regard. But that time is long passed and BYD is clearly leading the world forward in that regard now, along with a few followers. It seems Tesla got a little complacent at just the wrong time, or perhaps overly ambitious with its robotaxi plans for several years there.
Jumping to that comment under our article three months ago on cheaper “coming” Teslas, “Slm” wrote:
“I believe Tesla’s glory days are behind them now for the following reasons:
- Even though Mr Musk is a devise individual a human’s memory is short lived. Once he gets out of the spot light there will be a more neutral feeling about him within a few years. So I think his personality with not be a longterm defining aspect of Tesla.
- Tesla’s mantra is Over Promise and Under Deliver, there are only so many times a company can say, ‘within a year…’. FSD and the electric semi, just to name two.
- The Tesla Charging Network, which most would agree in the benchmark for EV charging in the US, is now open to non-Teslas.
- Tesla essentially has two models: Model 3 and Model Y. Both of which have been around for a few years.
- From the time Tesla announced the Cybertruck and its actual sale, BYD brought into production 47 new models.
- Chinese EVs have two deadly traits; they are inexpensive and, apparently, good.
- China makes (almost) two out of every three EVs in the world, these vehicles are in China, Asia, Latin America, UK, and sounds like soon in the EU without outrageous tariffs.
- There is a growing volume of good EVs from legacy automakers and scrappy startups in the US to choose from.
- So the bottom line is that there are just too many good EV choices out there and Tesla is no longer a strong competitor.”
Very interesting and good points. Tesla has been slow to innovate, slow to evolve its model lineup, and several other factors have been making its competitors more competitive. The company has also gotten more of a reputation for overpromising and underdelivering. We’ll see what these more affordable models are … one day … but I think even hardcore company fans have to wonder deep down if they are going to be revolutionary. There wasn’t much question of that with the Model 3, or even the Model Y. However, now … you get the feeling Tesla is trying to cling on for dear life more than light up the world and inspire a revolution. Maybe that’s just me, but as someone who has closely, obsessively followed the company since the Model S came out in 2012, I do think this is objectively the stage Tesla is in. It’s not about bias, it’s about watching the trends — both in the company and outside of it. Is it possible Tesla launches some revolutionary new models? Yes, it is. However, it seems much more likely that Tesla is struggling to find its way forward after hitting a sales peak in 2023 and then plateauing and drifting downward a bit. The competition is a thousand times better now than in 2020 or even 2023, and Tesla feels more and more like the complacent legacy automakers it disrupted for a decade than the cool new kid on the block.
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