Tesla scraps its ‘half-price’ $27,000 EV amid fierce competition from cheap Chinese automakers – and share price crashes
- Tesla canceled its plans to make a cheap electric car for the mass market
- Instead, the company will focus on developing self-driving robotaxis
Tesla has shockingly canceled the long-awaited $27,000 car it relied on to break into the mass market.
The half-price electric car would go into production from next year and was seen by investors as the saving grace that could save the struggling carmaker.
Tesla will instead continue developing self-driving robotaxis, according to Reuters, which broke the news on Friday morning.
Minutes later, Tesla’s stock price fell more than 5 percent but began to gradually recover. The company’s shares are among the worst performing stocks in the S&P 500 this year.
Currently, the cheapest Tesla Americans can buy is the Model 3, pictured, which retails for a starting price of $38,990.
Elon Musk has always been keen on launching an ultra-affordable Tesla. Pictured: CEO Elon Musk gets into a Tesla outside a hotel in Beijing, China
Earlier this week, its share price tumbled after it reported it fell far short of delivery expectations in the first quarter. Competition with Chinese rivals such as BYD has also been increasing recently launched an EV starting at $10,000.
News of Tesla’s plans to sell a $27,000 electric car first appeared in November. A source familiar with the matter told Reuters at the time that the vehicle would be manufactured at Tesla’s factory near Berlin.
The company would like to make a vehicle that retails for 25,000 euros (or $26,838).
If CEO Elon Musk had followed the reduced price, the EV would have cost less than half the price of an average electric car today, $55,353, according to January figures from Kelley Blue Book.
It was reported on Friday that workers were informed of the decision to halt development of the affordable in late February. βElon’s directive is to go all in on robotaxi,β a person who attended the meeting told Reuters.
An internal company message from a manager urged staff involved in the project to document their work.
βI want to thank everyone for all your hard work and dedication to pushing boundaries and executing the best design possible given the aggressive constraints we had to work within,β the post said.
‘We don’t want all our hard work to be in vain. That is why it is important that we record and document matters properly.’
In the minutes after Reuters announced the news, Tesla’s share price fell more than 5 percent but began to gradually recover
The decision to cancel the so-called Model 2 means abandoning a long-standing goal that Musk has often characterized as his primary mission: affordable electric cars for the masses.
His first “master plan” for the company in 2006 called for producing luxury models first and then using the profits to finance a “cheap family car.”
Musk had long planned to create a more affordable electric car and promised such a vehicle to investors. In 2022, he said the company had not yet mastered the technology needed to make this happen.
Sources told Reuters in September that the automaker was nearing an innovation that would allow almost the entire underside of the EV to be cast in one piece, a breakthrough that would speed production and reduce costs.
Since then, he has repeatedly promised such a vehicle to investors and consumers. Tesla did not respond to requests for comment.