Tesla has canceled its long-anticipated low-cost car, marking a sharp reversal from the company’s original goal of creating affordable electric vehicles for the mass market.
Sources familiar with the decision told Reuters that Tesla will now focus on developing self-driving robotaxis using the same small-vehicle platform.
This shift comes as Tesla faces growing competition, particularly from Chinese electric vehicle makers offering models priced as low as $10,000, which has intensified pressure on the company to remain competitive.
The cancellation of the low-cost Tesla model, sometimes referred to as the Model 2, was revealed during a meeting with employees in late February. The car was expected to be priced around $25,000, in contrast to Tesla’s current lowest-priced model, the Model 3, which retails for about $39,000.
While robotaxis offer the promise of innovation, they pose greater engineering challenges and regulatory risks, potentially delaying their rollout.Elon Musk has long promised an affordable family car, and his shift away from this plan represents a major pivot in Tesla’s strategy. Following the news, Tesla shares reportedly dropped more than 6%, but recovered slightly after Musk teased a robotaxi reveal on August 8.
