Tesla CEO Elon Musk’s denial of a report that the company had scrapped its low-cost electric vehicle project, known as the Model 2, has raised eyebrows among some senior executives. According to Reuters, Musk had publicly dismissed the story in April 2024, calling the news agency “liars” after it reported that Tesla had shelved the project in favor of self-driving robotaxis. However, people familiar with the matter revealed that executives had already been informed weeks earlier that the project was dead.
The Model 2 was a key part of Musk’s goal to make electric cars more affordable for the masses. First teased in 2020, it was expected to start at $25,000, significantly cheaper than Tesla’s current entry-level Model 3, which sells for $42,500. Despite Musk’s denial, no such car has materialized, and neither he nor Tesla has confirmed that the project is canceled. Instead, the company is preparing stripped-down versions of the Model 3 and Model Y, expected to launch in 2025 after delays.
Engineering chief Lars Moravy told investors that the new models would be “affordable,” but some executives are concerned that Musk’s denial of the Model 2’s demise could mislead the public and attract unwanted attention from the US Securities and Exchange Commission (SEC). Musk has a history of run-ins with the SEC, having settled with the agency in 2018 over a tweet about taking Tesla private.
The development comes as Chinese auto giant BYD has overtaken Tesla in global EV sales, thanks in part to its affordable $10,000 Seagull hatchback. BYD’s success has been a surprise to some, given that Musk had questioned the company’s quality and technology in a 2011 interview. Meanwhile, Musk has announced that he will step down from his role leading the US Department of Government Efficiency to refocus on his companies, including Tesla, SpaceX, and Neuralink.
As the electric vehicle market continues to evolve, Tesla’s strategy and Musk’s leadership will be under close scrutiny. With the company’s plans for affordable electric cars still unclear, investors and customers alike will be watching to see how Tesla responds to the changing landscape. Will Musk’s vision for affordable electric cars finally become a reality, or will Tesla’s focus on self-driving technology and other ventures take center stage? Only time will tell.
