Why Tesla’s Original Founder Is ‘Disappointed’ With Its Lineup

Tesla’s stated mission has always been to get to the point where it can build cheap electric vehicles. Sure, the original Roadster was expensive, but looking back to CEO Elon Musk’s Master Plan (and even the plan that existed before him), the idea was always to start with ultra-profitable luxury cars, scale up, and then do more affordable models in the long run.

Now, Tesla’s original founder and CEO is speaking out about a recent displeasure: Musk’s decision to prioritize building the Cybertruck—which, according to him, “looks like a dumpster”—and a Robotaxi instead of a cheap EV for everyone.

Welcome back to Critical Materials, your daily roundup for all things electric and tech in the automotive space. Also on deck: these major automakers are implicated in China’s new car padding scheme and Tesla leaves Hardware 3 owners in the dust as it inks a new $6.5 billion deal with Samsung. Let’s jump in.

30%: Tesla’s OG Founder Is Upset The Company Built A Truck That ‘Looks Like A Dumpster’ Instead Of A Cheap Car

If you’re a Tesla fan from way back, you probably know the name Martin Eberhard. For those who don’t, he was one of the original two co-founders of Tesla, along with Marc Tarpenning.

The CEO was ousted from his post at Tesla back in 2007. I won’t get into the specifics of things here, but know that after an arduous legal battle ending in 2009, Eberhard, Tarpenning, Elon Musk, Ian Wright, and J.B. Straubel were all permitted to be named as “founders” of the automaker.

Eberhard’s original vision (as outlined in the lawsuit) was for Tesla to eventually build a cheap, volume-production EV, similar to Musk’s original Secret Master Plan for Tesla. But Eberhard’s style was reportedly to source low-level parts from suppliers. Musk’s vision was to vertically integrate the entire company, which is where the automaker basically is today.

This isn’t the only thing that Musk and Eberhard disagreed on. In fact, the latest spat between the two is the company’s decision to build that Eberhard calls “a truck that looks like a dumpster” instead of a cheap EV.

Here’s what Eberhard had to say in a recent interview with YouTuber Kim Java:

I would have been doing a low-cost car because we should be able to do it now. I’m actually disappointed to see that Tesla canceled their low-end car program because that’s what the world needs, not a truck that looks like a dumpster.

Eberhard’s point isn’t about taste (although it’s apparent he has some), but it’s about the direction Tesla went when it decided a stainless steel wedge was more critical to the company’s success than an uber-affordable EV. The low-end car program that Eberhard is referring to is undoubtedly the $25,000 EV program that was reportedly canned by Musk last year.

Instead, Tesla is releasing its affordable EV based on the Model Y platform—just with a lot fewer bells and whistles. While Tesla hasn’t released the full details of this yet, Musk “let the cat out of the bag” during the company’s earnings call last week to confirm the rumors.

The car was seemingly spotted in the Chinese market several days ago with cloth seats, fewer painted trim panels, relocated headlights, and a metal roof. It’s not clear how much cheaper this will get the Model Y, but it’s unlikely to get the car anywhere near $25,000, especially with the $7,500 federal EV tax credit being pulled from the U.S. market.

Speaking of the Robotaxi, Eberhard had some choice words to discuss the direction Tesla is going with its autonomous ride-hailing platform:

I’m more skeptical of that than most people are. I mean, I probably would not have done that, or at least it would have been uphill sell for my engineering team to convince me we should. I think that people are overlooking the failures of these autonomous systems too easily.

I find it kind of amazing that you can put a prototype of something on the road and kill people sometimes because it doesn’t work correctly. And that’s kind of okay? It’s not for me.

While the Cybertruck and Robotaxis are certainly…a vibe, they’re arguably the opposite of what the EV market needs right now. Consumers want cheap, compact EVs with realistic range and real-world utility.

Tesla’s band-aid to slap a more affordable price on the Model Y isn’t improving its lineup in a meaningful way that will attract huge numbers of consumers, especially when the company’s image is disproportionately negative with lower-income buyers. We could’ve had the Tesla version of the Toyota Corolla, and instead, we have something that looks like it was rendered on a Nintendo 64.

60%: GM, Honda, Nissan, Toyota and VW Implicated In China’s New Car ‘Padding’ Scheme

Photo by: Volkswagen

It turns out that China’s zero-mileage “used” cars are just the tip of the iceberg when it comes to automakers in China inflating sales figures. Notice how I said “automakers in China” and not just “Chinese automakers,” as new complaints made by consumers in China reveal that just about everybody might be involved in the scheme, not just the latest players.

A new report from Reuters revealed that even Western automakers like Buick and Volkswagen stand accused of participating in padding their numbers alongside Japanese brands like Toyota. The allegation from consumers is that the automakers are insuring cars before they’re actually sold—this trick makes it seem like automakers have made a sale early and boost their numbers.

Reuters outlines nearly 100 such complaints made by consumers:

Between 2021 and 2025, 48 separate buyers said on 12365auto.com that they purchased new cars only to later discover they were already insured by the dealer. Many of the buyers said they felt deceived by the dealerships, especially when they realised the insurance on their cars was registered in other names.

Likewise, there were 26 separate complaints published between 2021 and 2025 on the China.com 315 auto consumer complaint platform, run by the state-owned China Internet Information Center. Another 23 were posted between 2022 and 2025 on Black Cat, a widely used consumer complaint platform run by tech firm Sina. In 14 complaints on the three platforms, buyers of BYD-, Neta-, Toyota-, Buick- and Chevrolet-branded cars said they were told by dealers the practice was aimed at booking sales early to meet targets.

One complaint, filed in December against a SAIC GM dealer on 12365auto.com, alleged the automaker required 60 cars to be insured without buyers to meet sales targets. Another complaint on China.com filed in April alleged a BYD store in Shaanxi told a buyer it had 12 cars insured in a batch to inflate sales last July.

Buyers of Li Auto, Changan, FAW-Volkswagen and Geely also reported cars being insured pre-purchase.

This scheme isn’t exactly new, but it’s exploded over the last two years as China’s auto industry steadily descended into a brutal Hunger Games-style free-for-all price war. More than 100 brands are all clawing for survival and some—arguably the biggest of the bunch—are accused of using the ol’ “fake it til’ you make it” strategy to win by pretending they already are.

Domestic brands like Zeekr were outed earlier this month for using this tactic. Now, the accusations have spread to BYD, Changan, FAW, Geely, Li Auto and more. Foreign brands and joint ventures are also being singled out for partaking in the activity, with Dongfeng Nissan, GAC Honda, GAC Toyota, SAIC GM and SAIC Volkswagen all having fingers pointed in their direction.

Reuters says that some dealerships have admitted to local media that this tactic was used to “meet sales targets”:

Separately, Reuters identified 29 official media reports from 2020 to 2025 that detailed complaints against dealers of major brands, including BYD and Changan and foreign brands Volkswagen, GM, Toyota, Nissan and Honda, run by their joint ventures with state-owned Chinese automakers.

In nine cases, dealers representing FAW Hongqi, SAIC Roewe, SAIC VW, Dongfeng Nissan, GAC Toyota, GAC Honda and SAIC GM told official media that insuring unsold vehicles was for booking purchases early to meet sales targets.

A Honda spokesperson said that GAC Honda prohibits dealers from taking out compulsory insurance before selling new cars and that any dealers found doing so would be dealt with severely. GM China said it does not require wholesale vehicles to be insured pre-purchase and that it counts deliveries, not insurance, in its sales reports.

[…]

A Volkswagen Group China spokesperson said it refused to boost sales figures through insurance and that complaints would be investigated.

At least five individuals have taken dealerships to court over their cars being pre-insured or insured in another individual’s name prior to them purchasing the vehicle. In three of these cases, the courts ruled in favor of the individuals and awarded them compensation. The verdicts on the remaining two cases were not made public.

This kind of fluffing isn’t just doing a disservice to automakers in China; it’s essentially weaponizing a loophole that could disrupt the entire supply chain by misrepresenting actual retail demand. ? Production overcapacity is a problem in China for automakers, even if they don’t want to admit it. This is why China’s overproduction has spilled out onto the global sales floor and resulted in even more shady channels like the zero-mileage “used” EVs sold to foreign markets.

90%: As Tesla Inks New $6.5 Billion Deal With Samsung, HW3 Owners Still Feel No Love

2026 Tesla Model Y Juniper

Photo by: Patrick George

Over the weekend, news dropped that Samsung had inked a new $16.5 billion chip production deal. The customer? According to Bloomberg: Tesla, which was shortly thereafter confirmed by CEO Elon Musk himself.

Currently, Samsung has a contract with Tesla to build its current Hardware 4 chips. This is the hardware that underpins both the Autopilot and Full Self-Driving software suites in Tesla’s vehicles. However, Samsung lost the contract to Taiwan’s TSMC for HW5—or, as Tesla now calls it, AI5—which will begin production of the hardware for a 2026 release before domesticating fabrication Stateside from Taiwan to Arizona.

Musk confirmed on X that Samsung would now return for its next-generation of hardware, dubbed AI6, which is expected to debut sometime around 2028 or 2029, given Tesla’s history of AI compute hardware lifespan and Samsung’s contract running through 2033.

But while we’re talking all about the latest hypebeast that is AI5 (and now AI6), Tesla is quietly leaving Hardware 3 on its own, depreciated island.

Hardware 3, which was said to have the capability to support unsupervised autonomous driving, does not. Musk admitted this earlier this year during an earnings call before the company said that it would need to come up with a plan to address the shortcomings and upgrade Hardware 3 cars for owners who purchased Full Self-Driving.

There is still no plan for this, as Tesla most recently said that it would not work on a solution until it first solved self-driving for HW4 cars, which is the exact opposite of what Musk pledged in August 2023. Tesla says that it plans to release unsupervised FSD in geofenced areas by the end of 2025.

What this doesn’t address is any owner who purchased a Tesla equipped with HW3 after November 2022, when Tesla made FSD available as a subscription. At the time, Musk had already said that Tesla owners would be able to add their cars to the Tesla Network to make up to $30,000 in passive income per year while owners slept, as long as the cars operated with FSD.

This means that owners who purchased the car after FSD went subscription may have purchased it with that intention in their heads. Except now their car not only can’t run unsupervised FSD, it likely won’t receive a hardware upgrade unless they purchase the $8,000 option outright. This could open a floodgate of lawsuits against Tesla (at least for owners who purchased a HW3-equipped Tesla after November 2022) for failing to make good on its 2016 promise that all cars came equipped with the hardware necessary for Full Self-Driving.

100%: Did Tesla Take A Wrong Turn?

Photo by: Motor1.com

The current barrier to cheaper Tesla models now appears to be very Elon-shaped, given his resistance to such a product internally and a multi-year allegiance to the same president who has now ripped away the EV tax credit from his company.

That being said, Eberhard’s point is that Tesla should have been focusing on building an affordable EV for the masses and not a stainless steel billboard or autonomous taxi.

I’m curious: do you think Eberhard is right? Should Tesla be really focusing on affordability to align with other automakers’ stances on the current state of EVs, or is Tesla’s intentional direction really the best plan? Let me know your thoughts in the comments.