Internal combustion at Tesla over low-cost EV

Some senior Tesla executives were alarmed last year when Elon Musk denied a Reuters report that the company had killed a planned all-new $25,000 EV that investors had expected to drive explosive vehicle sales growth, according to people familiar with the matter. "Reuters is lying," Musk posted on X, minutes after the story published on April 5, 2024, halting a 6% fall in Tesla's stock.

The executives knew that Musk had, in fact, canceled the low-cost vehicle, which many investors called the Model 2, and pivoted Tesla to focus on self-driving robotaxis, the people said. The company had told employees the project was over weeks earlier, Reuters reported, citing three sources and company documents.

Musk's post was so confusing to some senior managers that they asked him whether he'd changed his mind. Musk rejected their concerns and said the project was still dead, according to people with knowledge of the matter.

The executives' concerns, which haven't been previously reported, shed light on the company's struggle to deliver a low-cost, mass-market EV, considered a core promise of the company.

Some other Tesla executives were unconcerned about Musk's X post, said people familiar with the matter. The automaker keeps its product plans flexible, one person said, to respond to market conditions.

A year later, struggling with a dated lineup and falling sales around the world, Tesla has still not released the low-cost EV that Musk once called pivotal to the company's future. Neither Musk nor Tesla has explicitly confirmed killing an all-new model that investors and Tesla enthusiasts have long referred to as the Model 2 because it would slot in below the current cheapest model in Tesla's lineup, the $42,500 Model 3.