Tesla reportedly focusing on robotaxis in its planned budget electric car

According to foreign media reports, Tesla has abandoned plans to produce affordable electric vehicles (EVs). Reuters. Chief Executive Elon Musk said in January that he was “optimistic” that low-cost electric vehicles would be available in the second half of 2025. The automaker is reportedly going “all in” on developing robotaxis, which Musk describes as the future of transportation.

According to reports, the canceled entry-level electric car project (commonly known as “Model 2”) was codenamed “Redwood.” The automaker had expected to produce 10,000 vehicles per week, and Musk said “we will do everything we can” to achieve that goal. He has previously claimed that Tesla is developing two new electric vehicle models and expects to sell up to 5 million vehicles per year.

For nearly two decades, the CEO has described his long-term goal as building the Tesla brand out of luxury vehicles first and then using those profits to fund budget models. “When someone buys a Tesla Roadster, they are essentially helping to pay for the development of a low-cost family car,” Musk wrote in a 2006 “Secret Tesla Motors Master Plan” memo. Over the next few years, he frequently expressed these sentiments to clients and investors.

If canceled, the Model 3 sedan, priced at $39,000 and up, would become Tesla’s cheapest vehicle. The canceled budget model is expected to start at about $25,000.

ReutersSources told the outlet they learned of the cancellation at a meeting “attended by dozens of employees” in late February. The publication said it reviewed internal Tesla messaging about the shift, including a message advising employees not to tell suppliers “planned cancellations.” Other messages allegedly told staff that “the vendor should cease all further activity related to H422/NV91,” referring to the budget model’s external and internal codenames.

Musk release Friday on X (Twitter), “Reuters Lying (Again)” in response to the story—without listing any points of contention.

Tesla still has a lot of work to do. Not only is demand for electric vehicles slowing in the United States, but competition is fierce in China, where fast-growing BYD leads the entry-level market. The Chinese automaker said earlier this month that its sales rose 13% year-on-year. Meanwhile, Tesla said on Tuesday that its deliveries fell 8% annually and 20% quarterly.