Tesla may not launch a cheaper Model 2 anytime soon. According to a recent report by the news agency Reuters, the carmaker’s CEO Elon Musk has reportedly cancelled the company’s plans to build a low-cost electric vehicle. The company is reportedly planning to go all in on its robo-taxi service which is expected to launch in August. The news agency cited three sources to claim that the billionaire’s decision had been communicated to Tesla employees during an all-hands meeting in late February.
However, while replying to a post claiming the same as the report on micro-blogging site X (earlier Twitter), Musk said that “Reuters is lying (again)”
For years, Musk has been promising an affordable electric vehicle which was rumoured to be priced at $25,000.With this car, Tesla wanted to appeal to more customers with its EV vehicles.
In an interview with YouTuber Marques Brownlee in 2018, Musk mentioned: “A $25,000 car, that’s something we can do.” Later, in 2020, at the company’s first Battery Day event, he predicted that Tesla may eventually produce more than 20 million of these vehicles within a year.
Tesla’s plans for its new EV platform
Musk has also noted that the more affordable EV will be built on the company’s next-generation vehicle platform, which is also under development. Earlier this year, during an earnings call he said that the company is targeting production “towards the end of 2025”. However, he also warned that Tesla may delay this project due to the complexities of the manufacturing process.
While sharing the latest quarterly results of the company, Musk shared a note to the shareholders that said: “We are focused on bringing the next generation platform to market as quickly as we can, with the plan to start production at Gigafactory Texas. This platform will revolutionize how vehicles are manufactured.”
Why the company may be shifting its strategy
Increasing pressure from Chinese automakers that have been offering more affordable EVs for years, may have pushed Tesla to change its strategy, the report notes.
Musk has also said that allowing Chinese companies to sell cheap EVs in the US will be a death sentence for domestic automakers like Tesla. Due to high tariffs, no Chinese carmakers currently sell their vehicles in the US.
He said: “Frankly if there are no trade barriers established, they will pretty much demolish most other car companies in the world. They are extremely good.”
