Tesla shares drop after Elon Musk announced $25,000 'fully autonomous' EV

The company said it will use new battery designs and technology to cut costs

Tesla chief executive Elon Musk says manufacturing an affordable EV has been a dream of the company. Reuters

Electric vehicle maker Tesla’s shares dropped 6.9 per cent in after-hours trading on Tuesday after the company's chief executive Elon Musk said it would roll out a fully autonomous $25,000 (Dh91,800) model in about three years.

The company’s shares fell to $395.08 in after-hours trading, a 12 per cent decline on Monday's close, wiping $50 billion off its market value.

Manufacturing an affordable electric car “has always been our dream from the beginning of the company", Mr Musk said, addressing an online audience of more than 200,000 during the company’s Battery Day event.

“In three years, we can do a $25,000 car that will be basically on par … maybe slightly better than a comparable gasoline car,” he added.

Industry analysts said this could be tough to accomplish as software, sensors and gears required for even a semi-autonomous vehicle significantly raise a vehicle's overall costs.

Tesla said it will use new battery designs and technology to cut costs.

It claimed the new batteries will offer five to six times more energy and a 16 per cent longer driving range. Tesla did not disclose a timeline for when these batteries would be commercially available, but experts estimated that it could take years to implement such breakthroughs in battery technology.

This is not the first time that the billionaire founder of the California-based firm has promised a cheaper EV.

In 2018, he announced a $35,000 EV – the Model 3. However, Tesla raised the price in May last year, three months after it started taking orders. Its cheapest model currently costs $37,990.

The company also said it is taking orders for the new three-motor Model S Plaid.

Priced at $139,990, it can go from 0-97 kilometres per hour in under two seconds, and can achieve a top speed of 320kph. It can go up to 837km on a full charge and will be available for deliveries in late 2021, the company said.

"Tesla is aiming to be the best at manufacturing of any company on earth," Mr Musk said, adding that his company is aiming to produce 20 million vehicles a year.

Nearly 240 shareholders of the company listened to Mr Musk's address on stage while sitting in Tesla Model 3s in the company’s parking lot, honking their car horns in support.

The company is aiming to deliver 500,000 vehicles this year, 36 per cent more than 2019. In July, it said achieving that goal would be “more difficult” due to production shutdowns to contain Covid-19 earlier in the year.

Worldwide sales of cars are predicted to drop about 17 per cent this year to 75 million, according to researcher LMC Automotive.