EV Cars

The $25,000 Tesla Model 2 project was scrapped in favor of robotaxis

The cheapest Tesla may have been canceled. Again.

According to a report Friday morning from ReutersCiting three sources familiar with the matter, the company has halted plans to build a $25,000 Tesla that would sit behind the Model 3 and Model Y in the lineup.

If these sources get it right, it would be quite a turnaround from earlier this year, when a cheaper, higher-volume model for global markets seemed due as early as next year. Tesla reportedly called suppliers in January, according to Reuters sources an affordable Tesla is expected to come onto the market in 2025Codename Redwood and implies a total annual production of the model of more than 500,000 units.

2023 Tesla Model 3

2023 Tesla Model 3

In a presentation and question-and-answer session for investors a day later, neither the company nor Musk discussed the $25,000 Tesla project itself, but he provided a little more background on the vehicle as key to the company’s growth as part the company’s next-generation platform.

“It’s worth noting that if you look at the average selling price of the other best-selling vehicles in the world, they are much cheaper than the Model Y,” Musk said at the time, referring to the Toyota RAV4 and Corolla Honda Civic. “So people are really stretching their wallets to be able to afford a Tesla.”

At the time, Musk was bragging about it next-generation cost-reducing platform which Tesla likely turned to for this and other vehicles, is scheduled to enter production in the second half of 2025 with a “revolutionary new assembly line” at its Texas factory, with a “next” manufacturing setup that will be “head” – and is head and shoulders above any other manufacturing technology that exists anywhere in the world.”

Tesla Battery Day Vertical Integration Overview

Tesla Battery Day Vertical Integration Overview

The project or platform was not a surprising new development. Tesla made the idea of ​​a “compelling” $25,000 Tesla, including fully autonomous driving capability, the focus of its 2020 Battery Day, made possible in part by the expansion of large-format batteries and improved chemistry – including LFP – saying the model is due in three years .

Since setting the original 2023 arrival schedule, Tesla has sent conflicting signals about the project, which was confirmed as being in development in 2021 by a top Tesla executive in China. Some time later, Musk said that the company was not working on a $25,000 Tesla and that The Robotaxi project was more important. A year later, Musk confirmed the much-touted third vehicle platform that would make this possible Future Tesla electric vehicles are expected to cost half as much Manufacturing would enable smaller, affordable vehicles and production volume would exceed that of all other vehicles combined.

Musk has said since 2019 that he wants to make Tesla the operator of revenue-generating self-driving robotaxis. Although Musk has spoken about it many times since then, this actual business proposal has not been spelled out in any official Tesla financial document.

Tesla recently launched a version of its driver assistance system called Full Self Driving (Supervised), essentially replacing the beta version of its previous efforts to enable hands-free city driving. Full driver supervision is still required, and the system is nowhere near the fully autonomous functionality it would need for a robotaxi.

Tesla Model 3

Tesla Model 3

Meanwhile, producing a profitable electric vehicle at a significantly lower price is seen as one of the keys to enabling Tesla to compete in several new markets, including India. Tesla’s current cheapest vehicle is the Model 3, which sells at a starting price of $40,380 including destination.

Tesla is not responding to media requests for clarification, although financial analysts are sure to press Tesla executives on the project at its next financial conference, scheduled for April 23 Tesla’s worst quarter since the pandemic shutdownsit’s going to be a big thing.

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