Tesla Inc. (NASDAQ:TSLA) CEO Elon Musk has definitively shut down speculation about the company's long-rumored $25,000 traditional electric vehicle, marking a strategic pivot towards an all-autonomous future for the electric vehicle maker.

What Happened: During Tesla's third-quarter earnings call, Musk explicitly rejected the idea of developing a conventional $25,000 car, calling it "pointless" and "silly" in light of the company's autonomous vehicle strategy.

"I think having a regular $25,000 model is pointless. Yeah. It would be silly. Like, it'll be completely at odds with what we believe," Musk stated during the earnings call.

Instead, Tesla is focusing its efforts on the development of its robotaxi vehicle, dubbed the "Cybercab." Unlike traditional vehicles, the Cybercab will be designed exclusively for autonomous operation, without a steering wheel or pedals.

"Autonomous, it's fully considered cost per mile, is what matters," Musk explained. "And if you try to make a car that is, essentially, a hybrid manual automatic car, it's not going to be as good as a dedicated autonomous car."

The company's vision for the future is unambiguously autonomous. Tesla plans to begin volume production of the Cybercab in 2026, with ambitious targets of producing 2-4 million units annually across multiple factories.

"I think it's going to be very obvious in retrospect... that the future is autonomous electric vehicles," Musk emphasized. "Non-autonomous gasoline vehicles in the future will be like riding a horse and using a foot phone. It's not that there are no horses... but they're unusual. They're niche."

Tesla currently produces approximately 35,000 autonomous-capable vehicles per week, which Musk contrasted with competitors like Alphabet Inc (NASDAQ:GOOGL)(NASDAQ:GOOG) owned Waymo, noting that "Waymo's entire fleet is less than – they have less than a 1,000 cars. We make 35,000 a week."

Why It Matters: While abandoning the traditional $25,000 car concept, Tesla still plans to introduce a more affordable vehicle in the first half of 2025, which Musk indicated would be priced "sub-30k" with incentives. However, this vehicle will be designed with autonomous capabilities in mind, aligning with the company's broader strategy.

The company also plans to launch its robotaxi service in Texas and California next year, pending regulatory approval, with Texas expected to move faster due to less stringent regulatory requirements.

The decision comes as Tesla maintains its position as one of the few profitable electric vehicle manufacturers globally. During the earnings call, Musk noted that "to the best of my knowledge, there was no EV division of any company, of any existing auto company that is profitable."

This strategic pivot underscores Tesla's confidence in its autonomous driving technology, with the company predicting that its Full Self-Driving system will surpass human safety levels by the second quarter of 2025.

• Tesla Q3 Earnings Highlights: EPS Beat, Revenue Miss, Shares Climb On 2025 Timeline For Lower-Cost EVs

Image Via Shutterstock

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.