Tesla ditches affordable car plans, and shifts focus to the robot axis.
In a major strategy shift, Tesla has abandoned plans to launch an entry-level $25,000 electric car, sources familiar with the matter have confirmed to Reuters. The much-touted ‘Model 2’ that CEO Elon Musk touted as fulfilling Tesla’s mass-market mission is now officially cancelled.
Sources said a late February meeting announced the decision to concentrate on robotaxis instead. Tesla will develop autonomous vehicles on the same platform intended for the budget car.
The move represents Tesla pivoting away from its long-held goal of more affordable EVs for the masses. Recent company messages seen by Reuters instructed scrapping the project codenamed ‘NV91/H422’ and halting supplier communication on it.
Tesla now faces intense competition in the affordable segment from Chinese automakers. While it pursued the niche Cybertruck, rivals raced ahead with offerings as low as $10,000, capturing strong sales.
Experts note the robotaxi business remains challenging with unclear timelines and regulations. Some believe Tesla has missed the bus on lower-cost cars, given delays.
The announcement led to a share price slump though Musk refuted the news on Twitter. With sales dropping recently, investors have shown diminishing patience with escalating risks in Tesla’s transformation ambitions.
Only time will tell if prioritizing driverless technology over economic vehicles will support its aspiration of selling millions of cars annually. But for now, affordable EVs seem farther from the average consumer than ever.
