Tesla gives up on the cheap car? Musk denies then announces robotaxi

Musk has meanwhile turned to the construction of the much-discussed Cybertruck, an enormous pick-up truck with futuristic lines, an expensive and unprofitable idea. So much so that Musk himself, when launching its production a few months ago, declared: "With the Cybertruck we have dug our own grave". The lack of a popularly priced model in Tesla's range, more than three years later, is indeed proving to be a problem, despite the price-cutting policy of the past year, aimed at keeping volumes high. Not least because, in the meantime, the competition has moved on.

China's BYD, for starters, has a cheaper range. The Shenzhen-based giant closely undermines Tesla's leadership in battery-powered cars (BYD also produces plug-in hybrids) and has already overtaken the American company for the first time in the fourth quarter of last year. In the last quarter it allowed itself to be overtaken because it 'only' increased sales by 13 per cent instead of the usual +40 and +50 per cent performance. Despite being down for the first time since 2020 Tesla still delivered more cars: 386 thousand versus 300 thousand. This is last week's story.

Stellantis has already produced an electric under 25 thousand dollars, the Citroen e-C3 (23,300 euros). The Renault group is preparing the new electric Twingo (2026) but has the new €21,000 Dacia Spring ready. Volkswagen, on the other hand, is delaying its ID.2 All project, which should arrive in the second half of the decade. At the moment the most affordable Tesla is the Model 3 Highland, the $40,000 restyling.

And in any case, nothing would have hinted at such a twist. Not least because until a few days ago the specialist press was still talking about the hypothesis of a Model 2 crossover built on a new platform (project Redwood) and with new gigapress to mould the body in one piece.

"This decision," commented Dan Ives, an analyst at Wedbush and traditionally inclined to support a growth trajectory for the stock, "would result in a dark moment for Tesla. It would be a nightmare if this car project is abandoned, a blow to Tesla's bull narrative over the next few years'.

"I expect," reasoned Sam Abuelsamid, an analyst at Guidehouse Insight, "that Tesla decided that the margins on this new product would be too small and that the likelihood of customers choosing to pay extra for FSD (Full Self-Driving) was low. Moreover, given the way this product was planned to be built, minimising assembly costs, insurance rates would probably be very high. The high insurance premiums would make the car less attractive to those looking for something affordable'.L

A different reading by Michael Ashley Schulman, chief investment officer of Running Point Capital: "I applaud Tesla's bold move to define its niche in electric vehicles at the high end and not try to be for everyone. It is ceding market share for better margins and profitability."

Abandoning the Model 2 project would distance a goal that Elon Musk has often described as his main mission: affordable electric cars. His first plan for the company, in 2006, was to first produce premium models and then use the profits to finance an 'affordable family car'.

Since then, the South African-born tycoon has repeatedly promised such a vehicle to investors and consumers. Back in January, Musk stated that Tesla planned to start production of the Model 2 in the Austin, Texas, factory in the second half of 2025. And Reuters, once again, had revealed these plans.