Tesla's $25,000 car is dead for now. Here's why

Elon Musk said Tesla isn't working on it anymore

At Tesla's Battery Day event in September 2020, CEO Elon Musk said the automaker would have a $25,000 car on sale within three years that is also autonomous. Update: it won't.

Elon Musk announced the $25,000 car at Tesla's Battery Day event in 2020.

Elon Musk announced the $25,000 car at Tesla's Battery Day event in 2020. (Tesla)

Answering an investor question during the company's Q4 2021 earnings call about the progress of the vehicle on Thursday, Musk confirmed it is "not currently working" on one.

"You know, at some point, we will, but we have enough on our plate right now, too much on our plate, frankly," Musk said.

The lowest-priced model Tesla has offered in the U.S. to date was a $35,000 version of the Model 3 with a 220-mile range, rear-wheel-drive and cloth seats that was briefly available in 2019, fulfilling a promise made to deliver such a vehicle, but it was later discontinued. The Model 3 now starts at $44,990, which buys a rear-wheel-drive car with a 267-mile range.

The Tesla Model 3 currently starts at $44,990.

The Tesla Model 3 currently starts at $44,990. (David Paul Morris/Bloomberg via Getty Images)

Tesla prices increased throughout last year as demand outstripped supply, which was constrained by the ongoing shortages of semiconductor chips and other parts affecting the automotive industry. Musk said that will continue throughout this year and that there's no point in introducing any new models until the issue starts to ease, but he also suggested that asking about a $25,000 model is "the wrong question."

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Musk explained that once Tesla's Full Self-Driving is fully operational, Tesla owners will be able to deploy their cars in a robotic ride-hailing service that will allow them, and Tesla, to earn money from them, making the vehicles more affordable to own.

Elon Musk

Elon Musk said he will be "shocked" if Tesla's Full Self-Driving isn't safer than a human by the end of 2022. (Patrick Pleul - Pool/Getty Images)

"I think, at the point in which it is autonomous, the cost of transport drops by, I don't know, a factor of four or five," Musk said.

"It's like dividing the cost of that asset by five. So, if you have a $50,000 car, it's like having a $10,000 car all of a sudden, but maybe better than that because, still, you don't want to drive."

The Full Self-Driving feature, which now costs $12,000, is being tested by approximately 60,000 Tesla owners but is not fully autonomous and requires human supervision to operate. Musk had predicted that it would achieve full autonomy by the end of 2019 but said on the call that development trends indicate it will happen sometime in 2022.

"I would be shocked if we do not achieve full self-driving safer than human this year. I would be shocked," he said.