Tesla Gives Up on $25,000 Model 2 in Favor of Robotaxis: Report

The cheap EV’s platform will reportedly still be put to use, just not the way anybody else was hoping for.

byAdam Ismail|
A new Tesla Model 3 "Highland" is on display at the China International Import Expo in November 2023.
A new Tesla Model 3 “Highland” is on display at the China International Import Expo in November 2023. VCG via Getty Images


The ever-mythical, $25,000, sub-Model 3 Tesla. The EV for everyone. At this point, I can barely remember when I first learned of its supposed existence, nor can I recall all of the times it was supposed to be revealed and wasn't. According to Reuters, we'll be waiting a good sight longer, possibly even forever, because the manufacturer has reportedly canceled the vehicle. Don't fret, though: The rumored Model 2's platform shouldn't die in vain, as it's expected to eventually underpin Tesla's future robotaxi, which supposedly very much still is happening.

Reuters attributes this development to "three sources familiar with the matter," and having seen "company messages" pertaining to the decision itself. Tesla CEO Elon Musk quickly refuted the article, posting "Reuters is lying (again)" on X, because that must be the conclusion whenever a journalist reports anything Musk would rather the public didn't know, or think.

Regardless, one source told the news organization that "Elon’s directive is to go all in on robotaxi," while another stated that the Model 2's cancellation was announced internally in late February. One of the communications Reuters had seen supposedly contained a program manager telling engineering staff to wait before informing suppliers "about program cancellation." Musk still appears to believe robotaxis represent "the future of mobility," in Reuters' words, though another individual with knowledge of the company's plans says that they're not final.

"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 same manager reportedly wrote to staff on March 1. "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."

The cheap EV space has seriously heated up since rumblings around Tesla's new entry-level model began years ago. And nowhere is that truer than in China, where the automaker is losing market share to a plurality of rivals—most notably BYD, which has been able to deliver competitive products at far lower prices while retaining the profit margins it needs to grow. Perhaps Musk is prepared to wave the white flag on that challenge and believes Tesla can more easily set itself apart through commercializing robotaxis. Assuming Reuters isn't "lying," of course.

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