| Thanks for reading Hyperdrive, Bloomberg's newsletter on the future of the auto world. As 2023 came to a close and it became clear Tesla would lose its global electric-car sales crown, I couldn't help but think about what might have been had Elon Musk delivered on a prediction made years earlier. In September 2020, Musk put a bow on an event dubbed Battery Day by declaring that a series of innovations Tesla was working on gave the company confidence it could make a $25,000 EV within about three years. The lack of such a model in Tesla's lineup three years later is proving costly. China's BYD, which offers a bevy of even cheaper battery-electric models, became the new No. 1 in EVs last quarter. Worse yet for Tesla, the company appears to be years away from launching a $25,000 vehicle because Musk himself apparently stymied work on the project. Walter Isaacson wrote in his biography of Musk, published in September, that Tesla's chief executive officer held up plans to make the less-expensive vehicle and "repeatedly vetoed" the idea for two years after Battery Day. The pushback Isaacson depicts is head-scratching for several reasons. For one, Musk's master plan for Tesla from the very early days was to offer a wide range of models, including affordable family cars. Seventeen years after Musk authored a semi-famous blog post about Tesla's road map, the company had just four vehicles for consumers to choose from. While Tesla added a fifth model late last year, the carmaker charged initial customers more than $120,000 for its debut pickup, the stainless steel-clad Cybertruck. Another reason this chapter of Isaacson's book threw me was his recounting of Musk's rationale. He said the CEO believed a self-driving robotaxi the company was working on "would make the other car unnecessary," referring to the $25,000 Tesla. What's puzzling about this is that Musk described the cheaper Tesla during Battery Day as both $25,000 and fully autonomous. Putting aside whether that was realistic, it was clear that in his mind, this was a both-and proposition, not either-or.  Musk pressed Tesla's top executives to design a next-generation vehicle without a steering wheel or pedals. Photographer: Bloomberg Isaacson also chronicled a November 2021 meeting in which Musk gathered his top Tesla lieutenants in Austin and decided that the company's robotaxi would be a smaller, less-expensive car than the Model 3. This, too, suggested the $25,000 Tesla and the robotaxi were one in the same. What held the project up, according to Isaacson, was Musk's insistence that his designers come up with a car with no steering wheel or pedals. "We are not going to design some sort of amphibian frog that's a halfway car," Isaacson quotes Musk as saying in an August 2022 meeting. "We are all in on autonomy." The biographer goes on to describe how Musk's deputies persuaded him to green-light building a next-generation car with a steering wheel and pedals, portraying this as an example of the billionaire's capacity to change his mind. A less-charitable takeaway is that Musk's own executives continue to have less conviction than he does about Tesla's ability to develop self-driving technology. Had Tesla not dithered over these details and covered Musk's bet on autonomy earlier, the company may have stood a chance to stay ahead of BYD last quarter, or at least would be better positioned to pull back ahead in short order. Instead, Musk seems to have backed himself into a corner. He's predicted every year for the last decade that self-driving Teslas were imminent, only to attract mounting regulatory scrutiny by failing to deliver. Holding up the company's most important product offering and adding even more complexity to the already daunting task of bringing an affordable EV to market was a losing strategy.  Photo illustration by 731. Sources: NASA, Bloomberg, Getty Images For more on Tesla falling behind BYD, listen to the latest episode of Elon, Inc. You can subscribe via Apple, Spotify, iHeart and the Bloomberg Terminal.  The Nissan Leaf. Photographer: Dimas Ardian/Bloomberg The number of electric vehicle models eligible for a consumer tax credit of as much as $7,500 fell sharply as new rules from the Biden administration kicked in on Jan. 1. Stricter criteria reduced the number of qualifying models to 13 from about two dozen, according to fueleconomy.gov. The new rules set requirements limiting the amount of battery components made by Chinese manufacturers that carmakers can source and still qualify for the tax credit. Models that lost access to the credit include some versions of the Tesla Model 3, Nissan's Leaf, Ford's E-Transit van, and the Chevrolet Blazer and Silverado. | 
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