Tesla scraps its plan for a $25,000 Model 2 EV

Tesla has abandoned plans to develop an affordable electric Model 2, according to a report in Reuters. The news organization says it has reviewed company messages that say the affordable Model Y, which Tesla CEO Elon Musk claimed would sell for $25,000 or less, has been axed.

Musk has been talking about an affordable Tesla Model 2 for some time now. An affordable mass-market EV was supposedly always key to the company’s long-term “master plans,” and in December 2023, he said the company was working on a “low-cost electric vehicle that will be made at very high volume.” Then, this March, Musk told Tesla workers that the Model 2 would go into production at the company’s factory in Berlin.

In light of this news, that statement certainly raises eyebrows—Reuters reports that one of its three unnamed sources told it that the decision to scrap the Model 2 was made in late February. Instead, Musk is allegedly “all in on robotaxi,” Tesla’s plan to create an autonomous driving system that could allow its cars to compete with Uber or Lyft without a driver in the equation.

Tesla has no press office and has not rebutted the news, but Musk took to his social network to declare that “Reuters is dying,” then in another post claimed that “Reuters is lying (again).”

Earlier this week, Tesla posted its worst delivery results since 2020, with an 8.5 percent drop in deliveries year over year and yet another quarter of overproduction that has left the electric carmaker with nearly 150,000 vehicles produced but unsold.

The next few weeks may offer little respite for Musk or Tesla; the trial over the death of Apple engineer Walter Huang, who was killed when his Tesla Model X drove into a highway gore in 2018, gets underway in California on Monday.