What Is Tesla’s “Future Product” In Q2 Shareholder Letter?
Aside from the normal number fun regarding Tesla sales growth, its US auto market leadership, Tesla Supercharger growth, Tesla store & service center growth, and Tesla solar & energy storage growth, one thing stood out to me quite a bit from the Q2 Tesla shareholder letter. That one thing was “Future Product,” which showed as “In development” in a table displaying model-by-model production capacity across the globe. The factory where “Future Product” will be produced is “TBD” (to be decided).
There are various possibilities for what this future product/vehicle could be — an electric minibus (which is in Tesla Master Plan, Part Deux), an electric van (Cybervan?), a Cybercar(!!), a more “normal” Tesla pickup truck, etc. — but one possibility stands out above the rest.
Tesla’s mission has always been simple and clear — accelerate the world’s transition to electric transportation and sustainable, renewable, clean energy. On the vehicle side, there’s one way to do that which beats all others by a landslide — produce and sell increasingly affordable cars that meet all of the requirements of an average new-car buyer. The reason Tesla is so successful (and valuable) today is that it scored a wicked bullseye on this target with the Model 3, and then again with the Model Y. That said, there is a much larger market sitting untouched a stage below the Model 3 and Model Y market.
Most people in the world can’t afford a $40,000+ vehicle. Most people in the United States of America, the richest country in the history of the world, can’t afford a $40,000+ vehicle. And the way the economy works, a far larger portion of Americans could afford a $25,000 or $30,000 car than a $35,000 or $40,000 car. The opportunity is even larger in other markets, like China. Look at what the Tesla Model 3 has been doing in China and Europe, and then look at the cheaper & smaller electric vehicles that surround it in these markets. Imagine if Tesla had a smaller, cheaper option.
Once upon a time, Elon Musk said Tesla would never go lower than the $35,000 Model 3 on pricing. However, he eventually changed course on that and we’ve published several stories in the past few years about a potential more-mass-market, cheaper, smaller Tesla. This will possibly be a Tesla with less advanced or abundant tech. (Though, it seems like tech features is something Tesla will never compromise much on.) It will probably be a compact car. We have often called it “Model 2” out of convenience, but “Model C” seems like a more likely name (“C” could stand for compact, cheap, cool). In any case, if this model does come to fruition, Tesla hasn’t revealed yet what it would be called, so we have to use some kind of placeholder.
I assume that this car is what “Future Product” is in the Q2 shareholder letter. If that is the case, what is cool is that Tesla is indicating that enough progress is being made on it that it’s worthy of inclusion in that table. Surely, Tesla has several vehicles on the design table, but you don’t get to “Future Product” status unless Elon Musk is definitely intent on getting you to production. Let’s hope that this Tesla placeholder is indeed “Model C.” A cheaper Tesla would be a mind-blowing, market-disrupting, paradigm-shifting vehicle that would surely be limited by battery supplies more than anything else.
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