Tesla puts on hold plans for compact EV aimed at European buyers

BERLIN — Tesla CEO Elon Musk said the automaker has stopped work for now on a compact electric car, which previous reports said was being developed for the European market.

“We are not currently working on a $25,000 car,” Musk said during the company’s fourth-quarter earnings call on Jan. 26. “At some point we will. But we have enough on our plate right now — too much on our plate frankly,” Musk said.

Media reports had said Tesla plans to launch the Model 2 as its smallest car and that it would be built at the company’s factory now nearing completion in Gruenheide outside of Berlin, Germany.

Musk told analysts on the earnings call that Tesla will be focusing its efforts this year on increasing capacity at current plants in California and China and beginning production at its new factories in Austin, Texas and Gruenheide.

He said the automaker would not be launching any new models in 2022, pushing back the launch of its Cybertruck electric pickup to next year.

“It’s important to begin the ramp of Austin and Berlin to ensure that we are prepared once limitations ease, enabling us to increase total output more quickly in the future,” he said.

“We’ve begun production at both Texas and Berlin — we started that last quarter. But that’s not the most important thing. We focus more on when we get to volume production and when can we deliver cars to customers,” Musk said.

Tesla is currently carrying preproduction testing at the Gruenheide factory while it awaits final approval from local authorities. Musk said he would visit the plant in mid-February. Bureaucratic hurdles and an ongoing court case over the factory’s water use have delayed the opening of the facility for months.

Tesla’s European vehicle sales rose 72 percent to 168,613 last year, according to JATO Dynamics market researcher.

The Model 3 was the automaker’s bestseller in Europe with140,421 sales, up 63 percent year-on-year, making it Europe’s top-selling full-electric car.  Tesla began importing the Model Y into Europe from China in July and sold 27,839 units, according to JATO. The company sold 230 Model X SUVs  and 133 Model S sedans.

Tesla has said up to 500,000 Model Y midsize SUVs could be produced at the Grunheide plant once it is fully operational.

Tesla’s fourth-quarter net income rose to $2.3 billion, while revenues jumped 65 percent to $17.7 billion as the company managed to sell a record number of vehicles despite supply chain headwinds.