A new vehicle type like a van may help Tesla more than an affordable car
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Tesla is known for its luxurious, high-end electric vehicles with cutting-edge technology and impressive performance. However, the company may be planning a significant pivot to produce a more affordable car that would cater to a broader audience. This move would undoubtedly shake up the automotive industry, but one renowned industry expert thinks a cheap vehicle, while doable, is not the right move for Tesla.
Sandy Munro recently shared his insights on the future of electric vehicles, specifically Tesla, with Tesla Owners Silicon Valley. Munro sees a path that Tesla could achieve this less expensive car. According to Munro, it would need to use lithium iron phosphate (LFP) batteries, which are cheaper and still good enough for most of the population. Tesla currently only uses LFP batteries in a portion of their models today.
Sandy Munro Discussing Tesla
The Risk with Small, Cheap Cars
Munro says no one makes much money on small cars, especially in North America. Furthermore, Tesla would have to be more frugal in its approach to creating a more affordable vehicle. This approach means the company would have to consider what features are not essential. For example, Munro suggests that cheaper drum brakes could be used instead of disc brakes and that Bose stereo system might not be necessary for a more affordable car.
Munro says Tesla could get down to $24,000 to $28,000. But he cautions, "coming out with the cheap car, what does it really do for you? Not much, because people are still willing to put their hand in their pocket and pull out 40 grand and say I want that one. That is the risk with small cars." He also says small cars make a few hundred dollars per unit sold, considerably less than Tesla's current margins.
However, Musk must see some advantages in offering a more affordable car; he told the B20 conference in November, "Musk responded to the question familiarly, "I can't speak too much to the future of Tesla product development, except to say that we do think that making a much more affordable vehicle would make a lot of sense and we should do something."
A No-Risk Proposition with High-Profit Potential
Nevertheless, there is a significant gap in the market that Tesla could not only fill but dominate, "if I were Elon Musk, I'd be looking at making a minivan or something like that. He can still make a shitload of money and not take any risk. That is a no-risk proposition, making a minivan." Musk has floated the idea of a "highly configurable vehicle" in the past, and Munro sees a gaping hole. "When Dodge and Chrysler walked away from the minivan, there was no minivan out there. There is one, Kia Carnival and these guys can't keep them in the showroom."
Munro thinks it is the marketing people who killed the minivan, "everybody in marketing says, 'oh, we don't want to produce a car like that because it emasculates men and it gives women the image of being a soccer mom.' Guess what? There are a lot of guys out there who like that car because it was the biggest selling thing they had, and on top of that, there are a lot of soccer moms! So why not try and take advantage of that?"
A Tesla minivan would have all the amenities expected from the brand, but it could also sell the safety factor. Teslas are repeatedly awarded for their rigorous design and commitment to safety. Given that minivans are synonymous with transporting young families, it would be a perfect match.
Emissions Pooling is an incentive-based program supported by various governments—most notably the European Union—to help automakers meet strict carbon reduction goals under Corporate Average Fuel Economy (CAFE) standards.
CAFE standards mandate that automakers reduce the average CO₂ emissions across their fleet of newly manufactured vehicles. The EU’s 2025 targets are particularly aggressive, and manufacturers risk hefty fines if a sufficient portion of their new vehicles aren’t low- or zero-emission.
Emission Pool
Emissions pooling is a regulatory mechanism that allows automakers to combine their fleet CO₂ emissions to collectively meet environmental targets. Companies with low or zero emissions—like Tesla—can partner with higher-emitting automakers to help reduce their combined average and avoid costly fines.
In practice, this means pool members purchase emissions credits from Tesla, which uses its all-electric lineup to generate surplus credits. These credits help other manufacturers offset their emissions, while Tesla earns a tidy profit.
Tesla has long capitalized on this model, regularly selling emissions credits to strengthen its financials. Now, its European Union emissions pool is expanding again—with Honda and Suzuki joining existing members like Stellantis, Toyota, Ford, Mazda, and Subaru.
Green Bottom Line
Every automaker in Tesla’s emissions pool is effectively buying credits from a company with a 100% zero-emission fleet. In Q4 2024 alone, Tesla earned $692 million from regulatory and emissions credits, making up nearly 30% of its quarterly net income.
That’s a major chunk of profit driven by programs like emissions pooling—and with Honda now onboard, Tesla gains a significant new partner (and revenue stream) in the EU.
Tesla quietly included a cabin radar in its vehicles for several years before recently activating it through software update 2025.2. Tesla now uses the interior radar for several features, and later this year will add additional features that take advantage of the interior radar.
Cabin Radar Features
The first feature Tesla developed that uses the cabin radar is front row cabin sensing. Instead of relying on sensors in the seats to detect occupancy, Tesla now uses the radar to determine where people are sitting in the vehicle. The radar is much more accurate than a seat sensor, so not only will it prevent false positives that occur when placing a heavy object on the passenger seat, but it could also improve reliability by reducing the number of parts in the vehicle.
In future updates, Tesla intends to expand the occupancy sensing to the rear of all of its supported vehicles, which will help improve vehicle safety by correctly deploying airbags as needed on a dynamic basis.
Regular Radar vs 4D Radar
The 4D radar is Tesla’s latest iteration of the radar, which is capable of even more sensing features. While many of these features are still a work in progress and haven’t been enabled, we recently covered what’s coming for the cabin radar. For now, these 4D radars are limited to the Cybertruck and the refreshed Model Y, but Tesla intends to expand the 4D radar to other vehicles as parts become available. Older vehicles include a different part number for the cabin radar, but it’s not clear if or how that will affect upcoming cabin radar features.
Upcoming Cabin Radar Features
In Q3 2025, Tesla intends to add child-presence detection, as well as health-detection for critical emergencies. In short, the radar is a safety-focused addition and will be able to help protect an individual left behind in a vehicle.
In addition to child detection, the radar will also determine passenger sizes to dynamically determine which airbags to deploy, which can help reduce airbag injuries for shorter individuals sitting in the front seats.
The radar can automatically note if a child or baby is left behind in the vehicle and will notify you via the Tesla app immediately. It will also turn on the HVAC system to ensure their safety. In the case of an emergency, the vehicle can also automatically call emergency services in some cases and even report its location.
As a reminder, while Tesla vehicles outside of the United States support eCall, vehicles within the US cannot call 911 unless a phone is connected to the vehicle via Bluetooth. We hope that Tesla looks to add similar capabilities in North America to improve safety capabilities.
Which Vehicles Have Cabin Radars?
Tesla’s more recent lineup of vehicles includes cabin radars, but this isn’t an exact science, and we’ll explain why a bit further below.
Tesla includes the cabin radar on the 2024+ Model 3 and some 2022+ Model Ys. It’s also included on all refresh Model Ys, the Cybertruck and some 2021+ Model S and Model X vehicles, however, the exact hardware version of the cabin radar does differ between models. While there are different hardware versions for the cabin radar, it’s not clear whether all hardware versions will support all features in the future.
To complicate things further, some pre-refresh Model Ys (late 2022+) are already equipped with the cabin radar, while others are receiving a notice from Tesla to come in and have the radar installed. This is due to Tesla using the radar for driver and passenger occupancy sensing.
As such, some older Model Ys and Model 3s may either be equipped with the cabin radar or may receive a notification from Tesla to have it equipped to address the occupancy sensor recall.
Model S and Model X vehicles manufactured from approximately September 2024 should also include the cabin radar sensors, but it’s best to check to be sure. We’ve got some instructions below on how to do just that.
How to Check If You Have a Cabin Radar
There’s actually an easy way to check whether your vehicle has a cabin radar. To do this, you’ll need to enter Tesla’s Service Mode, which is aimed at technicians, but it’s perfectly safe to do so as long as you exit it before driving and don’t change any settings.
If you’re not sure how to access Service Mode, check out our Service Mode guide that will walk you through the process. Once you’re in Service Mode, use the menu on the left to navigate to the Safety & Restraints section and thenchoose Seats.
You’ll be presented with the seats panel that shows passenger occupancy. Between the two front seats, you’ll see a green box below or above the virtual screen. Tap on it and it’ll either say Restraints Control Module (RCM) or Cabin Radar (ICR).
Location of Cabin Radar
Not a Tesla App
On supported vehicles, the cabin radar is located between the two front seats above the rearview mirror.
Future Features
We expect Tesla to continue to develop features that rely on the vehicle’s cabin radar. Dog Mode, for instance, could be turned on automatically if you leave your pooch inside the vehicle and fail to turn on Dog Mode. Tesla can also trigger the rear HVAC fan even when the seat occupancy sensor isn’t triggered, which happens regularly with child seats.
Tesla is also expected to stop including seat sensors in every seat and instead rely on the cabin camera to detect passengers, reducing the cost of each vehicle. As with other Tesla features, new feature ideas on how to leverage the cabin sensor will come later as owners and product owners think of other clever uses for the new hardware.
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