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Tesla has apparently canceled its long-awaited affordable car. The move deviates from the company’s initial mission of bringing electric vehicles to the masses. According to Reuters and insider sources, Tesla has abandoned plans for what was tentatively called the Model 2. Instead, it will focus on developing self-driving robotaxis on a small-vehicle platform.

This decision represents a significant departure from earlier pledges made by CEO Elon Musk. Musk, who has often emphasized Tesla’s goal of making electric cars accessible to everyone, previously promised investors and consumers an affordable model. It was expected to retail at around $25,000. Production was to begin in 2025. However, with the cancellation of the Model 2, Tesla’s cheapest offering will likely remain the Model 3. The sedan is priced at about $39,000.

A white Tesla Model 3 parked in a foggy mountain location in right front angle view
Charlie Deets via Unsplash

Reuters insists that it spoke with three people “in the know” and also saw company correspondence on the matter.

The news has caused Tesla’s shares to drop by about 3%. This certainly reflects investor disappointment and concerns about the company’s strategic shift. Musk’s social media response denying the Reuters report further adds to the uncertainty surrounding Tesla’s plans. He just posted “Reuters is dying” with a negative growth graphic on X:

This decision comes amid escalating competition in the electric vehicle market. Particularly, pressure comes from Chinese manufacturers offering affordable alternatives priced as low as $10,000. Tesla’s pivot toward focusing on self-driving technology for robotaxis indicates a broader strategic move. Likely, it’s a shuffle to address regulatory challenges and engineering complexities.

Tesla has not officially commented on the cancellation. Sources reveal that the company communicated the decision to employees in a meeting held in late February. According to one insider, Musk’s directive is now centered on prioritizing the development of robotaxis in even lower volumes than originally projected for the Model 2.

The cancellation of the Model 2 marks a pivotal moment for Tesla, signaling a shift in priorities toward advancing autonomous driving technology rather than fulfilling the promise of an affordable electric car for the masses.