Report: Tesla Abandons Plans for $25K EV

Tesla is reportedly shifting its focus away from building a lower-cost electric vehicle priced around $25,000, opting instead to prioritize a planned robotaxi project. This decision marks a departure from the pivotal role the lower-cost EV was expected to play in Tesla’s overall growth strategy.

While Tesla CEO Elon Musk disputed the reports as “lying,” he did not provide specific rebuttals to the details outlined in the Reuters report. The company has been working on both projects for several years, with Musk previously wavering on whether to prioritize a traditional car or a futuristic robotaxi, despite the lack of a fully autonomous vehicle.

Musk’s initial tease of a low-cost Tesla in 2020 was followed by a halt in work on the project in early 2022 due to competing priorities. However, the project resumed later that year, with internal debates continuing over whether to pursue a traditional car or a robotaxi approach.

According to Walter Isaacson’s biography of Musk, the CEO expressed a preference for the robotaxi concept despite some engineers advocating for a more traditional car model. Musk’s vision for the robotaxi was ambitious, with expectations of transforming Tesla into a ten-trillion-dollar company.

Despite Musk’s initial reservations about the $25,000 car project, he eventually agreed to move forward with the plan outlined by his team in early 2023. However, internal documents cited by Reuters now suggest that work on the traditional car project has been halted in favor of the robotaxi approach.

The shift in strategy comes amid changing circumstances, including Musk’s decision to build both vehicles in Texas instead of Mexico. Tesla’s hesitation in fully developing the Mexico plant, attributed in part to high interest rates, has led to a reevaluation of the company’s manufacturing plans. Additionally, Tesla has been reducing prices on its top-selling models to remain competitive, particularly in China, where it holds a significant market advantage.