Last year, several high-ranking Tesla Inc (NASDAQ:TSLA) executives were taken aback when Elon Musk publicly denied a Reuters report that claimed the company had scrapped its plan to develop a $25,000 electric vehicle, sources told Reuters.
Shortly after Reuters published the report on April 5, 2024, Musk took to X (formerly Twitter) to call the story “lying,” which temporarily halted a 6% decline in Tesla’s stock. Despite a small recovery, shares still closed down 3.6% that day.
Behind the scenes, however, executives were aware that Musk had indeed canceled the so-called “Model 2” project, shifting Tesla’s focus instead toward developing autonomous robotaxis. Internal memos had informed employees weeks prior that the affordable EV initiative was discontinued, Reuters reported based on internal documents and insider accounts.
Musk’s public contradiction surprised some senior leaders, prompting them to question if he had changed his stance. According to sources familiar with these conversations, Musk dismissed these concerns and reiterated that the project remained on hold.
This episode sheds light on Tesla’s ongoing challenge to deliver a mass-market, budget-friendly EV—a goal that has long been viewed as vital to the company’s expansion. While some insiders were unsettled by Musk’s public statements, others saw it as part of Tesla’s adaptive and sometimes fluid approach to product development.
More than a year later, Tesla has yet to launch the affordable model. As sales growth slows and Tesla’s current lineup ages, the entry-level EV remains notably absent from the company’s public plans. Musk has neither confirmed nor outright denied the project’s cancellation but has stayed largely silent on the matter.
Separately, Musk recently announced he would step down from his role as special advisor to U.S. President Donald Trump, choosing instead to concentrate on his ventures, including Tesla and SpaceX.