Tesla reportedly drops plan to build low-cost EV

Tesla has reportedly scrapped its plan to develop a lower-cost electric vehicle (EV) estimated to be priced around USD 25,000, according to a report by Reuters. Marking a significant shift in the company's strategy, this decision comes despite the perceived importance of such a low-cost vehicle for Tesla's broader growth trajectory.

Instead of pursuing the affordable EV, Tesla will shift its focus towards the development of a planned robotaxi, which will utilise the same compact EV platform initially intended for the lower-cost vehicle, according to Reuters report.

Elon Musk, CEO of Tesla, responded to the Reuters report by accusing the news agency of "lying" in a post on his social media platform, X. However, Musk did not specifically challenge any details outlined in the Reuters report.

The move signifies a departure from a long-standing objective that Musk has frequently described as the company's main mission: affordable electric vehicles for the public. His initial "master plan" which opened a new chapter for the business back in 2006, aimed for producing luxury models first and then financing a "low cost family car" with the profits.

Tesla had been reportedly working on both the low-cost EV and the robotaxi projects for several years. However, Musk has previously expressed uncertainty over whether to prioritise a conventional car design with steering wheels and pedals or to pursue a more futuristic robotaxi concept, despite not having a fully autonomous vehicle from Tesla's production line.

The concept of a budget-friendly Tesla was first hinted at by Musk in 2020, but by 2022, he indicated that work on the project had been halted due to competing priorities within the company. Later on, the concept was then given new life, but Tesla's management couldn't agree on whether to build a conventional car or an innovative robotaxi. However, sources by Reuters now suggest that Tesla has halted work on the traditional car project in favour of prioritising the development of the robotaxi concept.