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Tesla’s next vehicles have the potential to usher in the extinction of gas cars
During the second quarter earnings call, Elon Musk tentatively confirmed that Tesla would be making a compact car and a vehicle with high capacity. Granted, it would probably take a few more years before such vehicles are produced, but one thing seems certain. Considering Tesla’s speed and pace, it would not be surprising if Tesla’s compact car and high capacity EV causes the extinction of the internal combustion engine.
Tesla’s current lineup of vehicles, which comprise the Model S, Model 3, Model X, and Model Y, are great EVs, but they are still fairly large for their class. This includes the Model 3 and the Model Y, Tesla’s “smaller” vehicles in its lineup. This, together with the vehicles’ premium price, end up blocking the company from reaching its full potential in the auto market. With a compact car and a high capacity vehicle, however, things could drastically change for Tesla.
Compact and High Capacity EVs
Tesla has mentioned the creation of a smaller car in the past, and more recently, the company has tapped into China’s creative minds for help in designing its compact car. This vehicle is expected to be designed and manufactured in China, but the opportunities for such a car go far beyond the country. Compact cars have a dedicated following, after all, and for good reason.
A higher capacity vehicle is also a key part of the mass market puzzle that Tesla could tap into. Higher capacity vehicles could come in many forms, like vans that could either transport people or cargo. Fellow EV maker Rivian is already involved in the development of electric vans, thanks to its partnership with Amazon. It would then not be surprising if Tesla also dips its feet in the development of its a similar line of vehicles, especially those that it could use for its own operations.
Opportunities in Developing Countries
Tesla’s current S,3,X,Y lineup are still premium cars through and through, and one thing that they cannot do is compete in a market that prioritizes cost. These markets, such as India and other southeast Asian nations, actually hold a lot of potential for the company. However, for Tesla to enter and compete in these regions, it would have to learn how to play the affordability and practicality balancing game.
Vehicles that thrive in the compact car segment usually offer the best performance and features within a limited price range. The Honda Fit/Jazz (or at least its initial iteration) is a good example of this, as the vehicle was affordable, practical, and still fairly fun to drive. If Tesla could create a vehicle that’s far more affordable than the Model 3 (perhaps in the $20,000 range), then the company could tap into a segment that is, at least for now, still dominated by legacy auto.
The same is true for high capacity vehicles. There is a reason why the compact MPV (multi purpose vehicle) segment exists, after all. MPVs are low cost, relatively bare bones vehicles that are designed to carry as many people or cargo at the lowest price possible. This usually results in vehicles that are not optimized for performance, with small engines and high seating capacity (think a 1.5 liter engine with seven seats). The Toyota Kijang, an example of this type of vehicle, has been around for decades, and for good reason. It simply has a very stable following.
The Tesla Effect and the Extinction of ICE
Interestingly enough, Tesla is already in the process of lowering its production and battery costs. This is one of the reasons why the company has been aggressively acquiring companies that are working on bleeding edge battery tech. Elon Musk is aware of this, as he noted during the recently held earnings call.
“It is important to make the car affordable. We will not succeed in our mission if we do not make cars affordable. Like the thing that bugs me the most about where we are right now is that our cars are not affordable enough. We need to fix that,” Musk said.
Fortunately for Tesla, it has now reached a point where the company is now being emulated by the legacy automakers in an attempt to catch up in the EV transition. The transition to electric cars is pretty much undeniable at this point, so it is now up to Tesla to set the pace. With this “Tesla Effect” in mind, it would be best if the electric car maker could expedite its expansion into other vehicle segments as soon as possible. Doing so would allow the company to accelerate the transition to sustainability.
After all, with vehicles that start at around $20,000 and with high capacity EVs that can transport numerous passengers, there will be very little reason for customers to buy a gas powered vehicle anymore. By taking on and competing in the compact and high capacity segment, Tesla could, effectively, usher in the extinction of the internal combustion engine.
The Tesla Semi is entering a new Pilot Program with Paper Transport, LLC (PTI), a Wisconsin-based transportation provider. The company will test the Semi’s Long Range configuration through “dedicated operations within the Chicago market.”
Chicago presents an interesting challenge for the Semi, as it will be a colder-weather climate that will test the Semi’s ability to operate in lower temperatures and in potentially large accumulations of snow. This is something Tesla has been testing with the Semi in Alaska and even in Northern California during the colder months, but Chicago will present a truly tough midwestern winter.
Tesla Semi spotted on journey home after winter performance testing
PTI says it is using the Semi to evaluate its strategy of reducing transportation emissions while maintaining performance, reliability, and cost efficiency. These are major arguments for the Semi being introduced into new fleets.
CEO of PTI Tyler Ellison said:
“PTI has been a leader in sustainable transportation solutions for over 15 years. We take a consultative approach to helping customers identify and implement the right transportation solution for their network. Our partnership with Tesla expands our portfolio alongside renewable natural gas and intermodal, giving customers more ways to reduce Scope 3 emissions without compromising service or economics.”
PTI is far from the first company to adopt the Semi within a fleet, as Tesla entered strategic agreements with PepsiCo. and its subsidiary Frito-Lay for a Pilot Program that extended throughout the California region.
Tesla has let companies like those utilize the Semi to determine whether it would be suitable for their operations. Additionally, Tesla gets valuable information regarding the Semi’s performance, knowing what to improve and what is ideal for companies that will utilize the all-electric truck for regional and nationwide logistics.
PTI plans to utilize the Long Range configuration, which is priced at $290,000 and features a range of approximately 500 miles, a three-motor powertrain, up to 800 kW of drive power, and consumption of just 1.7 kWh per mile.
Tesla Semi pricing revealed after company uncovers trim levels
VP of Maintenance at PTI, Bryan Ellen, added:
“We are excited to partner with Tesla, leveraging their ever-evolving technology. We are bullish in our estimation of the parallels available between our dedicated model and the efficiency of their fully electric Class 8 tractor. We anticipate a growing synergy between our businesses as we work to facilitate this sustainable solution for our customers.”
PTI has logged more than 87 million miles using sources like compressed and renewable gas, but now is looking to take it a step further with fully electric operations.
Tesla revealed on Monday that it is building a new autonomous vehicle at Gigafactory Texas, its plant just outside of the City of Austin. This particular vehicle will be geared toward those who are in need of a wheelchair-accessible car that would require no human driver for operation.
According to a new report from Wired, Tesla’s Senior Policy Advisor, India Herdman, told members of the Washington D.C. City Council on Monday:
“We are in development for a purpose-built, wheelchair-accessible autonomous vehicle. We know that paratransit can be very difficult, and people who are confined to wheelchairs permanently should still be able to move around freely, so that is an active product being built by Tesla in Texas.”
This builds upon what CEO Elon Musk said last year on X, which confirmed the company was working on accessible rides within its Robotaxi platform, which currently is confined to the Model Y.
Absolutely
— Elon Musk (@elonmusk) September 19, 2025
Tesla is also developing the Cybercab, which started employee rides last week. However, this vehicle is not necessarily geared toward wheelchair accessibility.
That leaves a major gap in the autonomous ride-sharing program that Tesla is attempting to build; the company has been pretty clear that it does not want to complicate its manufacturing lines by bringing in a wide array of body styles.
However, it seems necessary to have something larger that could help transport people to appointments when they cannot drive. For wheelchair accessibility, the Robovan, which was unveiled at the “We, Robot” event in October 2024, seems to be the most ideal solution:
Herdman did not indicate whether she was referring to the Robovan or if Tesla is building yet another body style that is geared toward full autonomy but also caters to the handicapped.
Tesla might need to develop something specifically for the handicapped in order to align with the Americans with Disabilities Act, which prevents discrimination against people with disabilities in transportation services. Uber was hit with a lawsuit late last year for “refusing to reasonably modify its policies, practices, or procedures where necessary to avoid discriminating against riders with disabilities.”
Tesla would obviously like to avoid this.
It will be interesting to see what Tesla will do with this project, and whether it will introduce something new to the market or just continue with the Robovan.
Tesla weirdly confirmed that its steering wheel-less and pedal-less Cybercab vehicle is now in the process of giving employees rides, a huge milestone for the vehicle program.
But the entire thing was super strange. On Friday, Tesla released a video stating that there was “Cool news from Giga Texas” and that employees were now taking rides in Cybercabs that have no manual controls. The units seen on public roads are engineering vehicles that have manual controls inside, a necessity as Tesla moved through the testing phase.
However, Tesla removed the video and reposted it shortly after with a more vague title. It seems like the employee rides are still going, but the video was adjusted slightly. The initial upload showed employees doing things like watching movies and adjusting the climate, but these snippets were removed in the second upload.
Cool news from Giga Texas pic.twitter.com/gvbG456Tzw
— Tesla Robotaxi (@robotaxi) July 11, 2026
Both images below were uploaded with the first video, but were removed after Tesla re-uploaded the announcement. These are not available in the second upload
Credit: Tesla
Credit: Tesla
Nevertheless, the announcement from Tesla is that the Cybercab is operating with employees inside who can control the vehicle’s audio, video, climate, and destination settings through their smartphone app.
Tesla has already been testing Cybercab engineering units, but last month, it was able to self-certify for SAE Level 4, which would enable unsupervised self-driving in Texas. The company is moving toward that, and the plans have always been to launch Cybercab rides this year.
The Cybercab is potentially looked at as the next generation of Tesla’s mobility leg. For the past 15 years, the company has been known as somewhat of an automaker, among many other things. However, these passenger vehicles that Tesla has manufactured are now moving into a new realm, as they will eventually drive themselves with no supervision thanks to the Full Self-Driving suite.
The Cybercab is just the next step of that: a true vehicle developed for the sole purpose of ride-hailing. It has no human controls, it has only two seats, and it will get passengers from Point A to Point B with no awkward driver, no need for manual inputs, and with no stress.
Tesla is moving forward with other developments related to the Cybercab project as well. However, the big announcement will come when Tesla finally announces that it is launching Cybercab rides to the general public, something that it plans to launch either late this year or early 2027.
Tesla Semi enters new Pilot Program with interesting challenge
Tesla is building a wheelchair-accessible Robotaxi
