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It's profit margin
7.5k on a 30k EV is huge, and would lead to lots of sales.
No one stupid enough to pay 110k for a cyber shit will car about a 7.5k tax credit.
So Tesla might take a little hit, but it's a huge disadvantage for affordable EVs
Tesla could have pursued an affordable model, but instead Elon pushed the robotaxi, and Elon said there was no need for an affordable Tesla model. If we assume that he actually expects to release the robotaxi at some point, and that he actually thinks it's important for anything other than trying to pump up stock, then it certainly looks like his plans are more focused on fleet sales than trying to sell to consumers. Making cars less affordable across the board (and slashing any funding for public transportation) only helps that business model.
I think I saw a snippet from his biography where Franz (head designer) convinced Elon to make the car so it could also have a steering wheel so as to not get fucked if fsd doesn't work out.
Supposedly took a lot of effort to convince him.
Guess that didn't pan out in the end. Nothing about that car is designed for non robotaxi use.