On April 5, 2024, Reuters reported that Tesla had terminated the project for the low-cost EV, often dubbed the "Model 2" by investors. Minutes later, Musk countered on X (formerly Twitter), stating, "Reuters is lying." This post temporarily stemmed a 6% decline in Tesla's stock, though shares still closed down 3.6%.
According to individuals familiar with the matter, these executives knew the "Model 2" project had, in fact, been canceled weeks prior, with Tesla pivoting its focus towards self-driving robotaxis. The discrepancy between Musk's public statement and the company's internal decision left some senior managers so perplexed that they directly questioned him. However, Musk reportedly dismissed their concerns, reaffirming that the project remained dead.
These previously unreported executive concerns underscore Tesla's ongoing struggle to introduce a low-cost, mass-market EV, a product once considered central to the company's future growth and a core promise to investors. While some executives were reportedly unconcerned, viewing Tesla's product plans as flexible to market conditions, the broader implications of the denial remain a point of internal contention.
A year later, Tesla continues to face challenges with an aging product lineup and declining global sales. The company has yet to release the low-cost EV that Musk once described as pivotal. Neither Musk nor Tesla has explicitly confirmed the termination of an all-new model.
Weeks after Musk's controversial X post, Tesla did release an investor update, assuring plans for "new vehicles, including more affordable models" that would be built on current manufacturing lines. This contradicts earlier statements from Musk and Tesla, who had touted the planned $25,000 EV as an entirely new model, designed from scratch on a new platform, and a testbed for manufacturing innovations.
Instead of an all-new model, Reuters reported in April that Tesla is now focusing on stripped-down versions of the existing Model 3 sedan and Model Y compact SUV. Pricing for these modified vehicles has not been announced, and their anticipated rollout in the first half of 2025 has been delayed. During an April earnings call, Tesla's engineering chief Lars Moravy stated that the affordable models would "resemble in form and shape the cars we already make," emphasizing their affordability.
Some executives reportedly expressed concern that Musk's public denial would confuse suppliers and investors, potentially hurting Tesla's sales as buyers might delay purchases in anticipation of a $25,000 vehicle that was no longer in the pipeline. There were also worries about potential SEC enforcement for misleading investors, given Musk's past settlement with the agency over a social media post in 2018. Reuters could not confirm if these SEC concerns were directly communicated to Musk or the agency.
Musk's social media activity has continued to draw attention. On the same day he denied the Reuters report, he boosted Tesla's stock in after-hours trading with a post announcing a "Robotaxi unveil 8/8" (August 8). This plan was reportedly not widely announced internally, and the "Cybercab" debut was later delayed until October, ultimately underperforming investor expectations.
Many investors have since tempered their expectations for a transformational $25,000 EV. In 2024, Tesla recorded its first annual vehicle sales decline, and sales were down 13% in the first quarter of 2025, amidst increasing competition and public protests related to Musk’s involvement with the Trump administration. Notably, Chinese automaker BYD surpassed Tesla in European sales for the first time in April and is gaining a global lead in affordable EVs, with its entry-level Seagull hatchback costing under $10,000 in China.
In a recent development on Wednesday, Musk announced his departure from his role as a special advisor to U.S. President Donald Trump, citing a need to refocus on his companies, including Tesla, SpaceX, xAI, Neuralink, and X. Tesla and Musk have not responded to requests for comment regarding these internal executive concerns.