Tesla Cancels Mass-Market $25,000 Car, Musk Says This Is A Lie

Photo: Maja Hitij (Getty Images)

A mass-market, low-cost electric family car has long been touted as the holy grail of EVs with the potential to be as transformative to society as the Ford Model T was in the early 20th century. Elon Musk promised to deliver this dream, but those plans have seemingly been put on the back burner. Reuters reported on Friday that Tesla has thrown out plans for the long-rumored $25,000 Model 2. However, Musk has refuted the report on Twitter despite the news agency citing Tesla employees as direct sources.

The Hype Behind Tesla Stock Success In 2023

While Musk told investors this year that the elusive Model 2 would enter production in 2025, the low-cost model was purportedly canned in February. Reuters reported:

Two sources said they learned of Tesla’s decision to scrap the Model 2 in a meeting attended by scores of employees, with one of them saying the gathering happened in late February.

“Elon’s directive is to go all in on robotaxi,” that person said.

The third source confirmed the cancellation and said new plans call for robotaxis to be produced, but in much lower volumes than had been projected for the Model 2.

Musk took to Twitter to denounce the report as a lie and remark that Reuters was dying. While I would understand if the automaker’s enigmatic CEO shifted his vision of what the future looks like, it seems like certain people were meant to be kept in the dark about the Model 2’s shelving. Reuters noted that messages were sent to employees on March 1 stating “suppliers should halt all further activities related to H422/NV91,” with some engineers already getting reassigned. H422 and NV91 are Tesla’s codenames for the low-cost model program. Telling employees and suppliers one thing while sending a different message to the public is a recipe for chaos.

Potential car buyers will likely be the biggest losers if the Model 2 project is actually dead. The Model 3 remains the most affordable Tesla vehicle, starting at $35,000 before any incentives. To reiterate the dream again, a mass-market $25,000 electric sedan rivaling the Toyota Corolla in terms of pricing would be transformational, regardless of what brand would release it.