Cathie Wood Says Elon Musk’s Latest Big Plan

Cathie Wood Says Elon Musk’s Latest Big Plan

Cathie Wood’s Tesla

After months of teasing it, Tesla (TSLA) – Get Free Report CEO Elon Musk effectively introduced the idea of a $25,000 next-generation vehicle during Tesla’s earnings call in January.

He’s been talking about the idea of such a vehicle for several years, first unveiling Tesla’s next-generation platform at Tesla’s Investor Day in March 2023, a platform that he said will be used to build both the promised robotaxi and the cheaper, next-gen car.

In December, Musk said that Tesla is actively working on a cheaper, next-gen vehicle that will be produced at scale. He called the production method a “game changer.”

Directly preceding Tesla’s fourth-quarter earnings report, Reuters reported that Tesla had told suppliers that it would like to begin production on an unnamed mass-market, compact crossover vehicle in 2025.

Though he didn’t provide much in the way of details or timelines, Musk said during the call that Tesla’s “current schedule says that we will start production (of the next-gen vehicle) towards the end of 2025,” adding the caveat that he is “often optimistic regarding time.”

Like the Cybertruck, however, it will be a “challenging production ramp. We’ll be sleeping on the line,” Musk said. “I am confident that once it is going, it will be head and shoulders above any manufacturing technology that exists anywhere in the world.”

Though Deepwater’s Gene Munster and The Future Fund’s Gary Black have each said that a sub-$30,000 vehicle would be a huge catalyst for Tesla’s business, both analysts have noted the risk that the knowledge of such a vehicle — before it is available — could hurt the sales of other Tesla models.

“Bottom line: Tesla’s likely going to announce a new vehicle later this year and that will slow sales,” Munster said, adding that it will make “a difficult 2024 meaningfully more challenging.”

Ark Invest: The impact of a next-gen launch

Though Musk said he didn’t know the size of Tesla’s addressable market during the call, Ark Invest said in a Monday note that the release of the $25,000 next-gen vehicle could boost Tesla’s addressable market “10-fold.”

In 2023, Tesla’s Model Y became the world’s best-selling vehicle at 1.2 million units, Ark’s director of research, autonomous technology & robotics, Sam Korus, said in a note. The model accomplished this feat with a sticker price above $40,000, a price at which only 5% of the market is addressable.

Arks’ research, according to Korus, suggests that with a $25,000 vehicle in its arsenal, it “expands to 50%.”

It remains unclear when such a model might make its way into volume production.

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