Musk Says Reuters Is “Lying” About Tesla’s Plans To Scrap Model 2    

Before reading the Reuters report on Tesla Motors. Consider what Elon Musk has just said:

Reuters is lying (again)

— Elon Musk (@elonmusk) April 5, 2024

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In recent years, we have cited several reports, including a Reuters report from late January, explaining how Tesla Motors was preparing to debut a mass-market electric vehicle for under $25,000.

According to a new Reuters report, citing “three sources,” Tesla has canceled plans for a “long-promised inexpensive car that investors have been counting on to drive its growth into a mass-market automaker.”  Instead, Tesla plans to focus on “developing self-driving robotaxis on the same small-vehicle platform,” the sources said.

Tesla shares tumbled as much as 5% on the report. 

So far, shares have slid 34% on the year. 

Short interest also jumped from 80 million shares to 102 million shares from mid-January. Current Bloomberg data shows that about 3.69% of the float is short. 

Elon Musk repeatedly told investors that Tesla planned to start producing an affordable model at its Texas factory next year. This was detailed in a Reuters report earlier this year. 

Sources said in the earlier report that the new mass-market EV would be a “compact crossover” that would compete with cheaper petrol-powered cars and inexpensive Chinese EVs, such as those made by BYD.

Tesla’s Model 3 sedan is the cheapest EV the automotive company offers at $39,000 in the US. Tesla initially planned for the affordable EV, dubbed Model 2, to start around $25,000. 

Two Reuters sources said they heard about the plan to scrap the Model 2 in meetings attended by employees, one of which occurred in late February. 

“Elon’s directive is to go all in on robotaxi,” that person said.

Another source with knowledge of Tesla’s plans said that pivoting away from the Model 2 strategy for robotaxis is a good idea. They cautioned that Tesla’s product changes could be altered again based on economic conditions. 

Tesla’s delay of the Model 2 comes as the average price of a used Tesla has been more than halved since peaking at $67,900 in late 2022. 

Meanwhile, the Xiaomi SU7 EV launch was a huge success in China as the Chinese company took on Tesla. 

And robotaxis it is…