Tesla has abandoned its efforts to produce an affordable electric car (EV). According to reuters In January of this year, CEO Elon Musk expressed his “optimism” that a low-cost electric vehicle would be available by the second half of 2025. Instead, it has been rumored that the automaker will “go all in” on robotaxis, which Musk has referred to be the transportation of the future.
Codenamed “Redwood,” the abandoned entry-level electric vehicle project was often referred to as the “Model 2.” In order to meet the automaker’s weekly manufacturing volume target of 10,000 automobiles, Musk stated, “We’ll be sleeping on the line.” He had already stated that Tesla was developing two new electric vehicle models that might sell up to five million units a year.
For nearly two decades, the CEO has described his long-term goal as using luxury vehicles to build Tesla’s brand before using those profits to fund budget models. “When someone buys the Tesla Roadster sports car, they are actually helping pay for development of the low cost family car,” Musk wrote in a 2006 “Secret Tesla Motors Master Plan” memo. In the following years, he often echoed those sentiments to customers and investors.
The cancellation would leave the $39,000 and up Model 3 sedan as Tesla’s cheapest vehicle. The scrapped budget model was expected to start at around $25,000.
Reuters’ sources told the outlet they were told about the cancellation in a late February meeting “attended by scores of employees.” The publication says it reviewed internal Tesla messages about the pivot, including one advising staff to hold off on telling suppliers “about program cancellation.” Other messages allegedly told staffers that “suppliers should halt all further activities related to H422/NV91,” referring to the budget model’s external and internal codenames.
Musk posted on X (Twitter) on Friday, “Reuters is lying (again)” in response to the story — without listing any points of contention.
Tesla has its work cut out for it. Not only has EV demand slowed in the US, but competition in China is fierce, with the fast-growing BYD leading the country’s entry-level market. The Chinese automaker said earlier this month that its sales increased 13 percent year over year. Meanwhile, Tesla said on Tuesday that its deliveries dropped eight percent annually while falling 20 percent from the previous quarter.
