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Plans For Low-Cost Tesla Model Reportedly Scrapped

Tesla has reportedly canceled plans to produce a new low-cost electric vehicle. Sometimes referred to as the Model 2, the low-cost EV was considered a crucial part of the automaker’s goal to bring EVs to the masses. The change in tack is said to be the result of intense competition from rival EV producers, including highly affordable new models from Chinese manufacturers like BYD, which now offer new EVs for as low as $10,000.

The all-electric Tesla Model 3.

According to a report from Reuters, news of the canceled low-cost Tesla project was shared by three sources familiar with the matter and outlined in company messages seen by Reuters. In light of this shift in strategy, Reuters states that Tesla is now expected to focus on the development of self-driving robotaxis that will utilize the small-vehicle platform initially expected to underpin the now-canceled low-cost electric vehicle.

Back in 2006, Tesla chief Elon Musk outlined the company’s plan to leverage profits from more-expensive models to finance the development of more accessible models. However, the least-expensive Tesla model that’s currently available is the Model 3 sedan, which starts at around $39,000 in the U.S., well off from the $25,000 price point previously expected for Model 2.

Tesla stock value fell roughly three percent upon release of the news that the company canceled plans to develop a new low-cost model. CEO Musk took to X, formerly Twitter, to deny the report.

Tesla CEO Elon Musk

The shift in strategy is attributed to increased competition in the EV space, including challenges presented by rival Chinese EV makers who have managed to capture significant market share with competitively priced offerings. Tesla reported an eight-percent year-over-year decline in deliveries this week, while Chinese automaker BYD reported a 13-percent increase.

Meanwhile, GM has confirmed the development of a new generation for the affordable Chevy Bolt EV, expected to arrive for the 2026 model year. GM has also launched an updated and more affordable 2024 Buick Electra E4 lineup in China.

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Jonathan is an automotive journalist based out of Southern California. He loves anything and everything on four wheels.

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Comments

  1. lol
    “EVs aren’t selling like they should because we don’t have low cost models”

    Manufacturers: yea we’re scrapping all those low cost models we’ve been talking about for years

    EV and PHEV, can the dead horse get any more dead?!

    Reply
    1. They are master baiters and switchers. 😉

      Reply
      1. All brands/manufacturers are doing it though. I wouldn’t be surprised if the Bolt refresh gets impacted in one way or another

        Reply
    2. You cannot make a low cost long range reasonable size car. BYD’s seagull is 150″ long with a range of 190m(LiFe chemistry). A model 3, a small car, is 185″ long with way more range. A city car sells in China. Not so much in the US. Ask Nissan. The original leaf was a flop.

      Reply
      1. Just looked it up, even leaf is 175″

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  2. Leaving America in the dust again. Dumbest. Move. Ever. By. Tesla.

    Reply
  3. Tesla is not doing well in spite of increasing popularity of EVs. Hyundai / Kia is showing how it can be done.

    Tesla a poorly-run company lead by a not-too-bright, deeply insecure man who spends most of his days on a dying social media website that he was forced to pay $44 Billion for with other people’s money.

    Using Tesla’s increasing issues to create a false narrate of waning EV popularity comes with the expectation that no one here knows how to read the news.

    Reply
  4. This Reuters hit piece has already been debunked, but spread the narrative.

    Reply
    1. Hardly debunked. A single Xit from the master Xitter, they doesn’t expand or explain anything and just claims “Reuters lies” is not debunking a researched article with sources and email memos supporting their story.

      Musk is a serial liar and narcissist. Accusations of a narcissist are confessions.

      Reply
  5. “CEO Musk took to X, formerly Twitter, to deny the report.”

    That’s a pretty big part of this story. Whether true or not, the CEO is insisting that they are not scrapping the low-cost model. The stated reason for abandoning the Model 2 doesn’t make any sense. They allegedly scrapped it because China is selling low-cost models? That would be like GM scrapping pickup trucks because Ford made the F-150. It makes more sense that Chinese competition is forcing Tesla to increase work on the Model 2 to prevent being undercut and outsold.

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    1. It does make sense. China is their largest market. BYD has them by the shorts on the low end. the 2 was DOA in China as it was already outflanked by BYD. The other major issue for Tesla is it is becoming a regular old car company. They made I think it was 50K more units in Q1 than they sold. They are coming head on with the reality of other car companies. Sometimes you make more units than you sell, and now what. Discount, pivot, etc. But for tesla, who always had someone waiting with baited breath for every unit, it is a shock. And it is hitting them in their lofty stock valuation. Their price if they were a regular car company would be closer to 50, not where it is. It has a long way to fall, and so musk is doing what he always does. Look over there, robotaxis, see, my lofty valuation is validated. We’ll see if wall street agrees. If I owned tesla, I’d be dumping.

      Reply
      1. Tesla has faced far more dire straits than a missed quarter. And while BYD might have a lead in China for now, there’s room for more than one car company (*cough* GM SAIC *cough*) and there’s room to sell vehicles in more than one market. A $25,000 Tesla would be a competitive offering around the world, including in markets where Chinese EVs are likely to be forbidden from being sold. There is no reason for Tesla to give up as the Reuters article suggests.

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        1. There is only one country BYD is forbidden, the US. And the difference from before is it is clear the ever growing demand argument is gone, eliminating the argument for the 59 P/E ratio. Hence musks shift to “robotaxis” to save his growth argument. His problem is of course that we have already seen that growth market falter with the cruise incident. And they are so far behind cruise/waymo not even a competition. cruise/waymo have vehicles in actual operation. Musk has his level 2 self driving. But hey, we are talking about him, which is what he really wants, look at me, look at me!

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    2. He didn’t say that. Just “they lie” but he doesn’t say what part of the article he claims is a lie.

      Reply
  6. You bunch of rocks now that this story is BS don’t you?

    Reply
    1. What evidence do you have? Reuters has 3 or 4 sources and copies of internal emails.

      Reply
  7. Sorry. Elon denied this report. There is some reveal on 2024-08-08, so wait until then.
    Without $25K car, there is no Tesla.
    Even if there is no Tesla, Chinese EVs are going to eat everyones lunch with their $10K car.

    Reply
    1. Maybe but not in the US. I can assure you we’ll tax them or figure out a way to not have them prosper here. Politicians on either side won’t allow it.

      Reply
    2. He denied nothing. Just a claim that Reuters was lying, but he provided zero context or proof of anything what part of the report is false.

      Would trust an article from a legitimate news source with sources and claims of evidence over a Xit from the master Xitter, that’s a serial liar and con man narcissist.

      Accusations of a narcissist, are confessions.

      Reply

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