Elon Musk Denies Rumors of Tesla Model 2 Cancellation

Tesla Model 2 Scrapped? Controversy Over
Reuters Report: Musk Immediately Refutes

Word has it that Tesla has halted the development of its affordable electric vehicle, the Model 2 project. Reuters reported this news, mentioning that Tesla focuses on robotaxi development instead of the Model 2.

Right after the report, Tesla’s stock price plummeted over 6%, causing a stir in the stock market. Tesla CEO Elon Musk vehemently denied the report via social media platform X (formerly Twitter). This incident has brought Tesla’s Model 2 project back into the spotlight.

Tesla is developing a $30,000 Electric Car

Tesla, which has been focusing on premium electric vehicles, has shifted its strategy to developing affordable electric cars. To increase accessibility, they plan to launch Model 2, a new entry-level model under Model Y and Model 3. The price of Model 2 is expected to be around $25,000, significantly cheaper than other Tesla models.

Considering that the price of Tesla’s best-selling Model Y is about $44,990 before incentives, this is quite a radical sales strategy. Tesla’s new strategy is interpreted as an effort to enhance competitiveness against the global market penetration of Chinese affordable electric cars, including BYD. Elon Musk had previously praised the competitiveness of Chinese electric vehicles.

Model 2, a Mix of Model 3 and Model Y, Introduces New Production Technology

Elon Musk continued his strong remarks, saying, “If there were no trade barriers, Chinese electric car companies would annihilate their competitors.” The Model 2, which seems to be Tesla’s new future project, has also received much attention. The silhouette of Model 2 was revealed in the teaser image released by Tesla.

Model 2, expected to look like a skinny combination of Model 3 and Model Y, seems to inherit Tesla’s existing design principles. It can be produced so cheaply thanks to Tesla’s new production technology, which is an unboxed process. This process involves assembling essential parts into modules in a dedicated space and connecting them to the car body frame.

Tesla Also Focusing on Robotaxi Development, Broadening Its Business Field

By simplifying the production process compared to before, Tesla can directly reduce production costs. Reuters, which previously claimed the cancellation of Model 2, predicted that this process would be used for Tesla’s robotaxi production instead of Model 2. Although Tesla’s autonomous driving technology has advanced, many skeptical views have been expressed on its full-fledged introduction to robotaxis; hence, the initial rumor about Model 2’s cancellation caused quite a stir.

Meanwhile, Tesla is committed to not only Model 2 but also robotaxis. Tesla is adding momentum to its future projects by announcing the unveiling of robotaxis this August. As the electric car market is declining, the need to expand business fields has been raised. As robotaxis emerge as a new possibility, Tesla’s future moves are also attracting attention.