Tesla’s Robotaxi event came and went last night, and we finally learned (very few) new details about the much-hyped car that CEO Elon Musk thinks will add $5 trillion to Tesla’s market capitalization.
But the main thing it left me (still) thinking is: why does this car even exist?
Tesla has been talking about robotaxis for a long time, so of course it makes sense that it would unveil a robotaxi… right?
But here’s the rub: when Tesla first started talking about robotaxis, it was in the context of the Model 3 and other vehicles that the company already makes.
As far back as 2016, Tesla was talking about “Tesla Network,” a proposed system that would allow Tesla owners to send out their cars to work as taxis once the company had solved full self-driving.
I mentioned all of this in my Tesla Model 3 review back in 2018, showing some of the details that indicated that Tesla was getting ready for this robotaxi future – such as the use of a phone as a key and an interior camera to keep tabs on occupants.
Musk even went so far as to say that Tesla will stop selling cars once it solves autonomy. The idea is that those cars would be more profitable to keep around as robotaxis, that each would be worth $100k-$200k due to this function and that they should be considered “appreciating assets” as a result. (Though Musk did say last night that Tesla will sell Robotaxis for $30k, which runs counter to this past assertion of his).
So there is a long history of Tesla referring to its vehicles as potential future robotaxis, rather than talking about an individual robotaxi product. And it even said the same last night, as there were 20 Robotaxis and 30 other Tesla vehicles shuttling people around at the event. Musk reiterated last night that all cars Tesla makes would be capable of full autonomy, and even said that existing cars would be driving all by themselves prior to when he said the Robotaxi will hit the road in 2026-2027 (though he stumbled and said “let’s not get nuanced here” when the crowd asked whether this would apply to HW3 cars, which Tesla previously promised full autonomy for).
But hey, maybe it makes sense to release an individual Robotaxi product that would be fully focused on this function and no other, in order to save cost and reduce complexity.
Also, I have to say, it looked great out there. Compared to the previous renderings/models/spy shot we’ve seen, I thought the final product looked fantastic. If it were just a normal EV, with that design, a small sporty low 2-seater for about that price, I’m sold.
A smaller car, without many of the creature comforts that might be desired by a driver, with more simplicity for less maintenance and easier cleaning, can certainly help to get costs down. And that’s great and needed. A $30k vehicle will be available to more people than a $42k Model 3, the next-cheapest car Tesla currently sells.
But…. why not a $25k Model 2 then?
Tesla already had the answer to this question: the cancelled Model 2
So if Tesla wants to have a cheaper, simpler car that is capable of robo-driving tasks, and if it’s still clear that all of its vehicles will gain this capability, why doesn’t it just make the cheaper, simpler car that it’s been talking about for years: the Model 2.
Not much was known about the Model 2, except that it would be a cheaper, smaller EV, starting at $25,000 – long thought to be the appropriate entry-level for consumer vehicles (the cheapest gas cars in America are around $17k – and a $25k EV would cost about the same after the $7,500 federal tax credit).
Instead, Musk directed the company to pivot to Robotaxi, and rhetorically, he has been talking a lot more about robotaxis, artificial general intelligence robots, and various other pie-in-the-sky promises, in keeping with the tech buzzword du jour..
But while there’s a lot of demand in the stock market for CEOs who incessantly talk about AI, there’s also a lot of demand in the car market for a cheap electric vehicle. And Tesla is a car company, after all, not a stock company (isn’t it?).
And what we do know from the event is that Tesla thinks they can make a self-driving electric vehicle for under $30k, and that that vehicle would be “over-specced” for what it is, using a more powerful AI computer than necessary. And they think they can do this within the next 2 years or so.
If these two things are possible, I believe that those efforts would be better channeled towards the Model 2, rather than the Robotaxi.
While Musk stated in the event that existing vehicles would be capable of full autonomy before the Robotaxi starts shipping, I don’t think anyone believes this. After a decade of FSD coming “at the end of next year,” the boy has thoroughly cried wolf and this timeline does not seem realistic.
Further, Musk said that it would come to California and Texas first, pending regulatory approval. Even if Tesla does swiftly get regulatory approval in those states, that still limits the addressable market while it works to scale up and get approved in other regions. The process of homologating a Model 2 would go much more smoothly than that, and could be sold globally much faster.
And while Tesla’s car timelines also tend to slip by several years, with how long we’ve been talking about a “cheaper Tesla car” and its relative similarity to existing vehicles (as opposed to the vast differences involved in making a Cybertruck or Roadster), I also think the Model 2 could have been manufactured before Robotaxi could (especially when taking into account regulatory timelines).
If that’s the case, then wouldn’t it be better for Tesla to make this car that I believe would be ready before Robotaxi will, that will fulfill a need for a lot of buyers right now (especially in a circumstance where affordable Chinese EVs are popular enough to force protectionist trade measures), that would have global appeal, and that will have all the capabilities of a Robotaxi once (or if) FSD finally ever gets solved?
Maybe it’s about cost-cutting… or maybe it’s about the stock
Now, perhaps part of the reason for Model 2’s cancellation is because Tesla did not see enough cost-cutting possible to build an EV for $25k, or thought the level of cutting would be too severe to sell desirable consumer vehicles at that price. With a Robotaxi, perhaps customers would accept a more bare bones experience than in a Model 2 that they own as a personal vehicle, and maybe that’s the only way that Tesla can get the price down.
And there’s something to be said for a vehicle that’s fully autonomous-focused, with things like inductive charging and being designed for robo-vacuums to clean the car without human intervention (both were briefly glossed over in last night’s presentation).
But there’s definitely demand for a cheaper, human-driven EV, and I think Tesla got the order wrong on this one – it would be better to sell a bunch of Model 2s earlier than a bunch of Robotaxis later, since I don’t think full level 5 FSD, along with regulatory approval, is coming within the next year or two. And if you have to choose whether to have hardware or software ready first, you definitely want to choose software – because hardware costs a heck of a lot to build.
Or… maybe all this AI talk is more about the stockthan it is about actual products, as alluded to above. This has been a common theory among Tesla haters for some time, but was never all that realistic because Tesla did and does sell a lot of cars, and a whole ecosystem around them of energy products like Powerwall and Superchargers, which work well and make a lot of revenue, with pretty good margins.
But if it is about that, it seems that Elon has run out of rope. The market, this time, doesn’t seem too convinced. Maybe instead of sky-high promises that nobody thinks will be met, and that you are burning public trust with each time you make them (or uh, maybe that’s happening for another reason)… people really do just want a cheaper car that everyone can buy.
Make it.
Charge your electric vehicle at home using rooftop solar panels. Find a reliable and competitively priced solar installer near you on EnergySage, for free. They have pre-vetted installers competing for your business, ensuring high-quality solutions and 20-30% savings. It’s free, with no sales calls until you choose an installer. Compare personalized solar quotes online and receive guidance from unbiased Energy Advisers. Get started here. – ad*
FTC: We use income earning auto affiliate links.More.
Toyota is now a battery supplier? That’s the plan. Honda will use Toyota’s batteries to power up its around 400,000 hybrids sold in the US.
Toyota will supply batteries for Honda hybrids in the US
Toyota’s $14 billion battery plant in North Carolina is ready for business. The facility will begin shipping out batteries next month, and it looks like Toyota already has its first customer.
According to a new Nikkei report, starting in fiscal 2025, Toyota will supply batteries for the roughly 400,000 Honda hybrids sold in the US.
Honda currently uses batteries from China and Japan for vehicles sold in the US, but the company is (like most) preparing for changes under Trump.
Advertisement – scroll for more content
Honda’s electrified vehicles, including EVs and hybrids, accounted for over a quarter of US sales last year. The company sold over 308,500 hybrids and 40,400 electric vehicles in the US in 2024. The batteries will likely be used in the CR-V and other Honda hybrid vehicles.
Honda Prologue Elite (Source: Honda)
Earlier this month, an extra 10% tariff on imports from China took effect. And that’s on top of the 10% imposed in February.
With more expected, including a 25% increase in vehicles imported from Japan, automakers are tightening up their supply chains.
Toyota’s new bZ4X AWD model introduced in Europe (Source: Toyota)
A 25% tariff on Japanese vehicles, up from 2.5% currently, is estimated to cost the six major Japanese automakers about $20 billion in the US.
Tariffs on imports from Mexico and Canada could cost Honda roughly $4.7 billion alone. Teaming up with Toyota to use its batteries for its hybrids is part of Japan’s broader global plans to ween off dependence on China and others for batteries and other emerging tech.
(Source: Toyota)
The new US plant, Toyota Battery Manufacturing North Carolina (TBMC), is over seven million square feet, or about the size of 121 football fields.
As Toyota’s first in-house battery factory outside of Japan, the plant could be a game changer as Trump’s tariffs take effect. Securing Honda as a buyer will already help Toyota cut costs as it ramps up output.
Toyota plans to ramp up electrified vehicle (EV, PHEV, and hybrid) sales in North America from around 40% last year to 80% by 2030.
Electrek’s Take
Trump’s tariffs are already causing havoc, with nearly every automaker warning that they put the US further behind. Overseas automakers are not the only ones feeling the heat, either.
The “Big Three,” GM, Ford, and Jeep maker Stellantis all build vehicles in Canada and Mexico. GM cut output at its plant in Mexico in January, where the electric Chevy Equinox, Blazer, and Honda Prologue are made. Stellantis halted operations at its Brampton Assembly Plant in Canada last month, where it was expected to launch the Jeep Compass EV production. What’s next?
For Toyota, it looks like its $14 billion bet to build batteries in the US is already paying off. Now, we just need it to introduce more EVs.
After unveiling three new electric SUVs in Europe last week, including the updated bZ4X, Toyota hinted more is on the way for the US. Check back soon for updates.
What do you think? Do you want to see more Toyota EVs in the US, like the new C-HR+? Let us know your thoughts in the comments.
FTC: We use income earning auto affiliate links.More.
U.S. President Donald Trump looks on as military strikes are launched against Yemen’s Iran-aligned Houthis over the group’s attacks against Red Sea shipping, at an unspecified location in this handout image released March 15, 2025.
White House | Via Reuters
Oil prices rose on Monday after President Donald Trump said the U.S. would hold Iran responsible for any future attack by the Houthis, a militant group in Yemen that has launched missile strikes on commercial shipping in the Red Sea and on Israel.
U.S. crude oil futures rose 40 cents, or 0.6%, to $67.58 per barrel. Global benchmark Brent traded higher by 44 cents, or 0.62%, at $71.02 per barrel.
“Every shot fired by the Houthis will be looked upon, from this point forward, as being a shot fired from the weapons and leadership of IRAN,” Trump said in a post on social media platform Truth Social. “IRAN will be held responsible, and suffer the consequences, and those consequences will be dire!”
Trump’s threat comes after the U.S. launched a new wave of airstrikes against the Houthis over the weekend. Defense Secretary Pete Hegseth said Sunday the U.S. campaign will continue until the militant group halts its attacks.
“This campaign is about freedom of navigation and restoring deterrence,” Hegseth told Fox News’ “Sunday Morning Futures.” “The minute the Houthis say we’ll stop shooting at your ships, we’ll stop shooting at your drones, this campaign will end. But until then, it will be unrelenting.”
The Houthis began targeting commercial shipping traversing the Red Sea in late 2023 in support of Hamas, after the Palestinian militant group launched a surprise attack on southern Israel and Israel responded with a ground and air campaign in Gaza. The Houthis and Hamas are both allied with Iran.
The Houthi missile strikes have forced international shipping companies to reroute container ships that would normally pass through the Red Sea and the Suez Canal.
Trump has reimposed a “maximum pressure” campaign against Iran with the goal of driving down the Islamic Republic’s oil exports. Treasury Secretary Scott Bessent recently said the Trump administration’s goal is to collapse Iran’s economy.
The White House believes Iran is pursuing a nuclear weapon, an allegation the Islamic Republic denies. Trump’s national security advisor, Mike Waltz, said Sunday that “all options are on the table” to ensure Iran does not acquire a nuclear bomb.
“We cannot have a situation that would result in an arms race across the Middle East in terms of nuclear proliferation,” Waltz said on ABC’s “This Week.”
Elon Musk wants to sell Tesla cars to conservatives, but if that’s the strategy, the automaker should start with having stores and service centers in red states and rural areas.
It’s no secret that Elon Musk’s approval ratings with progressives have been plummeting over the last few years and even more so in the previous few months.
Since he has control over Tesla and he is the only official spokesperson since he let go of the PR department in 2020, the CEO is dragging the automaker along for the ride.
This is a problem for Tesla as Democrats are much more likely to buy electric vehicles than Republicans:
Advertisement – scroll for more content
Tesla’s sales have been crumbling over the last few months, and after the stock crashed 15% last Monday, President Trump held a controversial commercial for Tesla with Musk on the steps of the White House on Tuesday.
It could be that people see through Musk and Trump’s quid pro quo and, therefore, don’t value Trump’s “Tessler” endorsement seriously. Still, there’s also a more practical reason why Trump’s fans and conservatives generally don’t buy more Tesla vehicles: the locations of Tesla’s stores and service centers (hat tip to Ben).
Even if some Trump fans were interested in buying a Tesla after the White House commercial last week, they might have been turned off by the idea of having to drive several hours to a store or service center.
Tesla does not have stores or service centers in Alabama, Arkansas, North and South Dakota, Kansas, Montana, Nebraska, or Wyoming.
In some cases, it’s not entirely Tesla’s fault, as some of these states have laws against Tesla’s direct sale models. They force automakers to go through third-party franchise dealerships. This is an abuse of old state laws aimed at protecting dealers against unfair competition from the automakers they represent.
Car dealer lobbies use their influence on state legislatures to use these laws to block Tesla, Rivian, Lucid, and other automakers who never had franchise dealerships from operating their own stores and service centers.
But on top of not having locations in several red states, Tesla also primarily has locations in urban areas, whereas conservatives disproportionally live in rural areas.
The automaker has several dead zones and doesn’t operate locations in smaller cities and towns where there are several Ford, GM, Toyota, and other car dealers:
While it certainly does happen, it’s hard to convince someone to buy a car if they have to drive several hours to pick it up and have it serviced.
Electrek’s Take
In short, it’s not only harder to convince conservatives, on average, to buy an electric vehicle, but Tesla is also not correctly set up to sell and service cars in conservative regions of the US.
Though, I think that’s a small part of the problem.
Cars are not supposed to be political.
Even if Tesla successfully converted a significant percentage of conservatives to electric vehicles, it wouldn’t stop the company’s brand destruction.
Tesla’s reputation amongst Democrats and independents has sharply decreased over the last few years, and especially over the last few months, and that’s thanks to Elon Musk alienating them.
It’s tough to be a successful consumer product company when you have alienated 50% or so of your market.
Tesla is basically becoming the MyPillow of Trump’s second term.
FTC: We use income earning auto affiliate links.More.