The carmaker’s CEO had dismissed a 2024 report about an internal decision to scrap a low-cost electric vehicle project
Some senior Tesla executives “questioned” CEO Elon Musk after he publicly dismissed a Reuters story last year that the company had dropped plans for a low-cost electric vehicle, the news agency reported on Monday.
Musk accused Reuters of “lying (again)” in April 2024, following a report that Tesla had quietly shelved development of the so-called Model 2 EV and shifted its focus to self-driving robotaxis.
According to people familiar with the matter, Tesla executives had already been told weeks earlier that the project was dead. Musk’s denial post on X caught some managers off guard, prompting them to ask whether he had reversed course. He reportedly confirmed the plan was still shelved, leaving staff unsure of how to respond to suppliers and investors.
The Model 2 was part of Musk’s longstanding goal to bring affordable electric cars to the masses. First teased in 2020, it was expected to start at $25,000 — well below Tesla’s current entry-level Model 3, which sells for $42,500. A year after Musk’s denial, no such car has materialized, and neither Musk nor Tesla has confirmed that the project is canceled.
Tesla is instead preparing stripped-down versions of the Model 3 and Model Y, now expected in 2025 after delays. “The key is they’ll be affordable,” engineering chief Lars Moravy told investors this April.
Gary Black, a Tesla investor who manages money for the Future Fund LLC, said he didn’t view Musk’s statement as a “denial” at the time, noting that Musk often makes “brief and abrupt” comments that “can be about anything.”
Some Tesla executives reportedly raised concerns that denying the Model 2 was dead could mislead the public and even draw scrutiny from the US Securities and Exchange Commission (SEC). Musk settled with the SEC in 2018 over a tweet about taking Tesla private, agreeing to have certain posts pre-approved by a lawyer – a requirement he reportedly ignores.
The development comes as Chinese auto giant BYD has overtaken Tesla in global EV sales. The company’s $10,000 Seagull hatchback helped BYD outsell Tesla in Europe for the first time in April.
Musk dismissed BYD in a 2011 Bloomberg interview, questioning its quality and technology.
Last week, the tech mogul, who had been leading the US Department of Government Efficiency (DOGE), announced he would step down from the role to refocus on his companies, including Tesla, SpaceX, xAI, Neuralink, and X.
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