Musk refutes claims of abandoning the masses with Tesla’s decision to discontinue affordable EVs

Tesla CEO Elon Musk blasted a report on Friday that his electric vehicle company has abandoned efforts to manufacture its “low cost family car” and instead shifted focus on developing its self-driving taxi.

Tesla’s reported axing of the inexpensive car could put a damper on investors’ plans to see the company become a mass-market automaker.

Since 2006, Musk has envisioned creating an affordable car for the masses, but he first would sell luxury vehicles and use the profits to finance the more affordable cars.

Musk had a terse response to the report, posting on his X platform, “Reuters is lying (again).”

Two sources told Reuters the decision to end development for the Model 2 was revealed during a meeting in late February, with the company now shifting focus to the robotaxi. A March 1 company message from a project manager advised engineering staff to hold off on telling suppliers about the “program cancellation.”

Another March 1 message from a different manager thanked engineers for all of their hard work.

“I’d like to thank everyone for all your hard work and dedication to pushing boundaries and executing the best design possible given the aggressive constraints we had to work within,” the message said. “We would not want all our hard work to go to waste, so it’s important that we tie things off and document things properly.”

Just in January, Musk told investors his plan to build the affordable models beginning in the second half of 2025, with the hopes of selling the Model 2 at $25,000. Tesla’s cheapest vehicle, the Model 3, retails at $39,000.

Tesla’s reported scrapping of the Model 2 comes as Chinese car manufacturers such as BYD pose strong competition after having developed an electric vehicle priced at $10,000 — $15,000 below the Model 2’s price. BYD sales in China have soared from 130,000 to more than $1.5 million.

The Chinese automaker seeks to export the electric vehicles to America and retail it at double the price, which would still make it more affordable than Tesla.

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BYD reported a 13% year-over-year gain, while Tesla reported an 8% drop in deliveries this week. Since last July, Tesla shares have dropped by more than 40%, equal to a loss of $400 billion in market value. However, the company’s market share of $545 billion is higher than the combined worth of the next three most valuable carmakers: Toyota, Porsche, and Mercedes-Benz.

With the company shifting gears toward its self-driving taxi, the company has been faced with several lawsuits and investigations into crashes involved with its Autopilot and full self-driving driver assistance systems.