Topline
Billionaire Tesla CEO Elon Musk denied that Tesla is scrapping plans to create a low-cost electric vehicle—something Musk has promoted for years and was expected to hit the market next year—after Reuters reported Friday the company killed the project and would be putting more resources into creating robotaxis.
Key Facts
Tesla decided in recent weeks to stop work on its long-awaited, affordable electric vehicle, but to continue work on self-driving robotaxis, Reuters reported, citing three anonymous sources.
Musk has repeatedly said a major goal of Tesla was to have an electric vehicle that was affordable for more people, and told investors in January he expected the entry-level option—estimated to cost around $25,000—to be available in the back half of 2025.
Musk responded to the Reuters article on X, his own social media platform formerly known as Twitter, posting: “Reuters is lying (again),” but offered no details on the report.
Forbes has reached out to Tesla for comment.
Big Number
1.8%. That’s about how much Tesla stock was down at 1:25 p.m. ET. It had fallen more earlier in the day, but started to recover after Musk denied the Reuters report.
Tangent
The Reuters exclusive came just days after Tesla reported its first negative quarterly delivery growth since 2020. The company announced it delivered about 387,000 vehicles in the first three months of the year, which was significantly below the average analyst forecasts of 457,000, according to FactSet. Tesla blamed the decline partially on supply chain issues following an arson attack at its Berlin factory in March.
Key Background
Tesla reportedly stopping development of a low-cost electric vehicle comes as demand for electric cars is lower than expected, leading the company to struggle for months. Tesla has been the worst-performing major stock this year—down more than 30% year-to-date—in part due to its January earnings report that showed a 40% year-over-year decline in quarterly profits and a below-expected revenue growth of just 3%. Tesla is facing slowing vehicle deliveries in part because of slowing demand for electric vehicles and increasing competition from China, where companies have been able to produce electric vehicles at relatively low prices. Demand for EVs has decreased as electric vehicles are still more expensive than gas cars, and the issue was worsened by higher car loan interest rates and a decline in government subsidies that incentivized drivers to make the switch to an EV. BYD, Tesla’s primary competitor in China, offers a number of low-cost electric vehicles, including one for less than $10,000, and Reuters reported it plans to export that model and offer it for around $20,000.
Forbes Valuation
Forbes estimated Musk to be worth about $191.2 billion as of 1:25 p.m. ET Friday afternoon, making him the third-wealthiest person in the world.
