Tesla gears up for 2025: Low-cost EVs, autonomous cars to hit US roads

Electric automaker Tesla is set to roll out affordable EVs and launch a paid autonomous car service in 2025, focusing on cost cuts and innovation despite a dip in vehicle deliveries last year

Tesla has reaffirmed its commitment to launching new, budget-friendly electric vehicles (EVs) in the first half of 2025. The announcement, coupled with plans for a paid autonomous ride-hailing service set to begin testing in June, sparked investor optimism despite the company’s quarterly earnings missing Wall Street expectations, news agency Reuters reported.

 

Tesla’s market valuation has surged since the election of US President Donald Trump, a known ally of CEO Elon Musk. However, the automaker faced a decline in deliveries last year, increasing pressure to introduce lower-cost models and advance its self-driving technology, which Musk views as crucial for Tesla’s long-term financial success.

 

Autonomous driving tests begin in June

During a call with analysts and investors, Musk revealed that autonomous Teslas would be deployed without drivers in Austin by June, emphasising a cautious approach to ensure public safety. He also noted that Tesla’s Full Self-Driving (FSD) software would undergo unsupervised testing in additional states, including California.

Cost reductions and affordable EV plans

Tesla continues to cut manufacturing expenses, achieving the lowest-ever costs for materials and labour in the fourth quarter. Reuters calculations indicate that production costs per vehicle have dropped from nearly $39,000 two years ago to approximately $33,000. Despite previously scrapping plans for a dedicated low-cost platform, Tesla now intends to leverage its existing EV production lines to introduce more affordable models.

Future of Tesla’s robotaxi

Tesla announced that large-scale production of its robotaxi is scheduled for 2026 at its Texas factory. Analysts see potential in Tesla’s push for self-driving and autonomous mobility services, though Musk acknowledged that some older Tesla models would require hardware upgrades for full self-driving functionality.

 

To stimulate demand, Tesla has relied on low-interest financing, a move that could squeeze profit margins in the coming quarters. Excluding regulatory credits, the company’s vehicle sales margin fell to 13.59 per cent in Q4, down from 17.05 per cent in the previous quarter. Revenue for the period totalled $25.71 billion, falling short of analyst expectations of $27.27 billion. Adjusted earnings per share stood at 73 cents, below the anticipated 76 cents.

Competition and growth projections

Tesla experienced its first annual drop in deliveries last year, largely due to rising borrowing costs and fierce competition from global rivals such as China’s BYD, as well as BMW and Volkswagen. Despite this, the company remains optimistic about a return to growth in 2025, though it did not reiterate Musk’s earlier forecast of 20 to 30 per cent sales growth.

Tesla’s trade tariff concerns

With Trump proposing new tariffs on imports from Mexico, Canada, Europe, and other trading partners, Tesla’s supply chain and profitability could face disruptions. CFO Vaibhav Taneja acknowledged that such trade policies, if implemented, would impact the company’s operations.  (With agency inputs)