Tesla reportedly scraps affordable EV plans

Tesla has cancelled a much-discussed affordable EV, but it will continue to develop autonomous vehicles based on the same platform, Reuters reported Friday, citing three anonymous sources familiar with the matter.

Two sources told Reuters they learned of the decision to abandon the affordable EV, thought to be a crossover targeting a $25,000 base price, in a large meeting that one said happened in late February. That person said Tesla CEO Elon Musk has instructed Tesla to “go all in on robotaxi.”

The third source also told Reuters that the affordable Tesla EV had been cancelled, adding that the automaker was now planning to produce the autonomous robotaxis in much smaller volumes than had been anticipated for the affordable crossover, which would have significantly undercut Tesla’s current cheapest vehicle, the Model 3, which starts at just under $40,000.

Reuters also reported that internal Tesla messages referenced the decision to cancel the entry-level model. One from March 1 from an unnamed manager on the program reportedly discussed the entry-level model’s scrapping with engineering staff and advised them to hold off on telling suppliers “about program cancellation.”

The report was substantially edited after its original publication, including a reference to a post from Musk on the social-media site X accusing Reuters of lying.

Reuters speculates that Musk’s delay in committing to an entry-level model has made launching one much harder due to increased competition from Chinese automakers. While Tesla worked on launching the Cybertruck and Musk focused more on his other businesses, Chinese automakers doubled down on affordable models, grabbing market share in China and Europe and weakening the business case for a low-margin $25,000 EV, Reuters reasons.

Musk in 2020 said Tesla’s next-generation platform would make a $25,000 EV possible. And just earlier this year Reuters reported that Tesla was telling suppliers that it wanted to start production on a vehicle based on this next-generation platform in 2025.