Last year, some Tesla executives experienced confusion and anxiety after Elon Musk publicly denied reports that his long-awaited $25,000 electric vehicle (EV) project had been canceled. This model was expected to significantly boost Tesla’s vehicle sales.
When Reuters published a report on April 5, 2024, stating that the project had been abandoned, Musk responded sharply within minutes via X (formerly Twitter), saying “Reuters is lying.” Although this announcement briefly halted the 6% drop in Tesla shares, the stock closed the day down 3.6%. However, sources close to the matter confirmed that the low-cost vehicle, also known as the “Model 2,” was indeed canceled. At that time, Tesla had shifted its focus to developing self-driving robotic axis vehicles. According to an earlier Reuters report, the company had informed its employees weeks prior that the project was over. Musk’s public denial caused confusion among some senior executives, and questions were raised about whether Musk had reversed his decision. However, according to sources, Musk confirmed to executives that the project has been definitively canceled and there are no changes. This event highlights the difficulties Tesla is facing in achieving one of its biggest promises to investors and consumers: producing an affordable, mass-market electric vehicle. While some executives stated they were not bothered by Musk’s statement, citing Tesla’s flexible product strategy that adapts to market changes, this internal turmoil reflects the company’s tension regarding the future of affordable EVs. A year later, Tesla is still struggling with an increasingly aging product lineup and declining sales worldwide. The $25,000 vehicle that Musk previously said would play a critical role in Tesla’s future is still not on the market. Tesla has never officially confirmed the cancellation of the Model 2. Meanwhile, Musk announced this week that he is stepping down from his role as an advisor to former US President Donald Trump to focus on Tesla, SpaceX, Neuralink, xAI, and the social media platform X. Tesla did not respond to requests for comment, and Musk has not commented. A few weeks after Musk’s announcement on X, Tesla released an update to investors stating that it plans to offer “new vehicles, including more affordable models.” However, these models will be produced on existing production lines rather than on an entirely new vehicle platform. The affordable models the company is currently working on are more economical versions of the Model 3 sedan and Model Y SUV. These models, initially planned for release in the first half of 2025, are experiencing delays, and pricing details have not yet been announced.
During Tesla’s April earnings call, engineering chief Lars Moravy confirmed that the new affordable models would “resemble the shape and form of our current vehicles,” indicating a departure from the revolutionary EV platform Musk initially promised.
