Tesla has reportedly scrapped plans to develop a more affordable electric vehicle (EV) priced around $25,000, according to a Reuters report. This decision marks a significant shift in the company’s strategy, especially considering the potential of a lower-cost car to broaden Tesla’s customer base and accelerate overall growth.
Instead of pursuing the affordable EV, Tesla will reportedly focus its efforts on developing a robotaxi, which will utilize the same compact EV platform originally intended for the lower-cost vehicle. However, Tesla CEO Elon Musk has publicly disputed this report on his social media platform, calling it a “lie” without providing specific details to contradict the Reuters story.
This move signifies a departure from a long-held goal that Musk has frequently described as central to Tesla’s mission: making electric vehicles accessible to the masses. Tesla’s “master plan,” unveiled in 2006, outlined a strategy of first producing luxury models to generate revenue, which would then be used to finance the development of a “low cost family car.”
Sources familiar with the situation say Tesla had been working on both the low-cost EV and the robotaxi projects for several years. Musk himself has previously expressed indecision over whether to prioritize a traditional car design with a steering wheel and pedals or to pursue a more futuristic robotaxi concept, despite Tesla not yet having a fully autonomous vehicle in production.
The concept of a budget-friendly Tesla was first introduced by Musk in 2020. However, by 2022, he indicated that work on the project had been put on hold due to competing priorities within the company. Later, the idea was revisited, but Tesla’s management reportedly couldn’t agree on whether to focus on a conventional car or a robotaxi design.
According to Reuters’ sources, Tesla has now decided to prioritize the robotaxi project, potentially aiming to capitalize on the growing market for autonomous ride-hailing services. This decision could leave the wait for a more affordable Tesla in limbo for the foreseeable future.