Six months later, Mr. Musk appears to have indirectly acknowledged that Tesla has indeed shelved its plans for a human-driven $25,000 vehicle. During an earnings call on October 23, he remarked that creating an affordable electric vehicle would be "pointless" unless it was fully autonomous.
This comment was made in reply to an investor's inquiry about the timeline for a $25,000 non-robotaxi model. Musk began to respond, saying, "We’re not making a non-robo…," but was interrupted by another executive. He later clarified, stating, "Basically, I think having a regular $25K model is pointless. It would be silly."
The Reuters article from April indicated that Tesla had indeed abandoned plans for a new, affordable mass-market electric vehicle, while still pursuing a self-driving robotaxi. Since that time, Musk has increasingly emphasized the company's focus on robotaxis and autonomous vehicles.
Neither Tesla nor Musk provided comments for this report.
During the October earnings call, Musk mentioned that Tesla is planning a "$25K car" known as the "Cybercab," which will be a two-door, two-seat fully autonomous vehicle. He introduced a prototype at a high-profile event on October 10.
Musk stated that production of the Cybercab is expected to begin in 2026, following the rollout of fully autonomous versions of the current Model 3 and Model Y in Texas and California next year. However, the company faces significant technological, regulatory, and legal hurdles in fulfilling Musk's ambitious promises regarding fully autonomous vehicles, which have been echoed for nearly a decade.
A newly affordable Tesla aimed at human drivers had recently been a cornerstone of the company's strategy to become the largest automaker globally. For several years, Tesla set an ambitious target of producing 20 million vehicles annually by 2030, which would represent a tenfold increase from its current sales and nearly double that of Toyota, the leading global seller. However, in May, Tesla removed the 20-million target from its latest sustainability impact report.
As recently as January, Musk reaffirmed the intention to develop an all-new affordable electric vehicle during an earnings call, stating that this next-generation model would debut in 2025, initiating a second significant "growth wave" following the launches of the Model 3 and Model Y in 2017 and 2020, respectively. Investors and enthusiasts often referred to this anticipated budget-friendly vehicle as the "Model 2," which would be positioned below the Model 3, Tesla's current entry-level model starting at $42,490.
In January, Musk indicated that the new model would necessitate "new revolutionary manufacturing technology." However, after Reuters reported in April that the Model 2 had been abandoned, Musk proposed a strategy for "more affordable" vehicles that could be manufactured using the same production lines as existing Tesla models.
Seth Goldstein, an analyst at Morningstar Research Services, expressed his belief that these lower-cost vehicles would be developed on Tesla's existing platforms and priced in the mid-$30,000 range.
“It was my understanding that the original plan was to make the more-affordable vehicle on a new platform,” he told Reuters. “I think Tesla realized they were late to making an affordable vehicle versus their Chinese-EV peers … So, they changed their strategy rather than make a large investment to produce a new vehicle.”
Following the April 5 Reuters report indicating that Tesla had abandoned the Model 2, Musk took to X that same day to announce plans for a “robotaxi unveil” scheduled for August. However, the event was postponed to October and took place on a film set near Los Angeles, ultimately disappointing Wall Street and resulting in a 9% decline in Tesla's stock the next day.
Some investors perceived Musk’s remarks regarding the Cybercab, along with presentations of an autonomous “Robovan” concept and humanoid robots, as lacking substantial information about the products. Tesla has not clarified whether the Cybercab will incorporate any new self-driving technology beyond the existing “Full Self-Driving” feature available in its current lineup. The current models still require a human driver to maintain vigilant attention, as they cannot operate fully autonomously.
The intended market for the Cybercab remains ambiguous. Its sports-car aesthetics and two-door, two-seat design—an increasingly rare configuration in the broader U.S. automotive landscape—left some analysts confused, as they anticipated a robotaxi that would accommodate more passengers and luggage.
During the October earnings call, Musk stated that the design of the concept vehicle was “optimized for autonomy” and aimed at providing affordability.
“It will cost … roughly 25K, so it is a 25K car,” Musk said. “It just won’t have a steering wheel and pedals.”