Tesla has reportedly dropped plans for a $25,000 battery-electric vehicle, even while rivals try to speed lower-cost BEVs to market.
Reuters reports that the world’s No.1 EV maker has dropped plans for a $25,000 Model 2 but will continue to use the platform developed for the car for robo-taxis.
Tesla CEO Elon Musk pushed back on the report via X, his social media network. Calls to Tesla seeking comment were not returned.
Last January, Musk said the BEV maker planned to start production of the affordable model at its Texas factory in the second half of 2025. But Reuters reported the vehicle has been canceled based on seeing messages dated in early March from upper management to engineers on the project, indicating the car is scuttled.
Tesla shares, which are down 33% on the year thus far, were down between 3%-4% on Friday after the report surfaced.
Musk has long ignored reporting protocols and practices of public companies and has been fined by the Securities and Exchange Commission in the past for not observing the SEC’s communication rules. Musk’s frequent cryptic messaging on X often moves the stock.
In contrast, Ford recently issued a detailed press release updating investors on its production postponement of for 3-row SUV BEVs by two years, and the company’s plans to have a hybrid version of each Ford-branded model in showrooms by 2030.
Tesla’s sales and deliveries have been under pressure since the start of the year in the U.S. and China. Pricing is also under pressure in both markets. BYD and other domestic BEV makers in China continue to raise market shares, while Western companies including Tesla, Volkswagen and others are having to cut prices via incentives to keep up.
Additionally, in March, the U.S. Department of Transportation shook up the domestic BEV market when it unveiled new rules on fuel economy and vehicle emissions. The rules will boost sales of gas and hybrid vehicles into the next decade and delay many BEV rollouts, while giving consumers more time to get used to the transition to battery-electrics.
Tesla has led all U.S. automakers in BEV sales to date by a huge margin. The company’s fortunes going forward in the short term are a bit muddled, though, as consumers are downshifting their interest in BEVs while a new crop of BEV CUVs and SUVs are hitting the market and interest is climbing in hybrids, which is a product segment Tesla doesn’t play in.
Wall Street is still absorbing the likelihood that the Model 2 and its projected sales volume will not see the light of day, as well as governments in the U.S. and EU delaying approvals of self-driving robo-taxis.
With its shares down, the recently launched Cybertruck underwhelming the marketplace and the Model 2 scrapped, X’s value tanking and Musk’s right-wing public persona taking a hit as he frequently targets Democrats, as well as any attempts at diversity, equity and inclusion policies or efforts, Musk and Tesla may be entering a new era of declining valuation and reduced market performance.
