Tesla might have scrapped its plans for a more affordable electric car, according to reports from insiders to Reuters. Earlier in the year, CEO Elon Musk had stated that production of the car would begin by the end of next year. Musk took to social media to refute Reuters' claim, calling it 'lying again'.
Multiple sources tell Reuters that the budget-friendly Tesla EV has been axed. The news agency claims to have seen internal communications and messages to suppliers regarding this decision. Instead of selling the cheaper EV separately, Tesla is now looking to utilize the EV platform for the development of self-driving taxis, although the specifics and timeline for this project remain unclear.
While Tesla has not officially confirmed the cancellation of the cheaper EV and has not responded to inquiries from Reuters, CEO Elon Musk took to his social media platform to denounce the report as 'lies' without providing further clarification.
The alleged cancellation of the cheaper EV signals a departure from one of Tesla's longstanding strategies - using profits from luxury electric cars to fund the development of an affordable family car. The Model 2, expected to be priced at $25,000, was set to follow this strategy. Currently, the cheapest Tesla vehicle is the Model 3, available starting at $39,000. Musk has previously hinted at the release of a more affordable EV, with initial plans for production to begin in the second half of next year. However, the project was reportedly put on hold at one point, as detailed in a biography of Musk published by Walter Isaacson last year.
With Chinese manufacturers dominating the market for affordable EVs, like BYD overtaking Tesla as the top electric car manufacturer last year, Tesla's hesitation in releasing the 'Model 2' may have cost them a competitive edge. The company's focus on the Cybertruck in recent years could have contributed to this delay, as per Reuters.
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