Billionaire Elon Musk-led electric car company Tesla had major plans to create a cheap car, but now the company has literally been forced to junk all those plans and shift focus elsewhere - to developing self-driving taxis instead, says report. Notably, Chinese electric car manufacturers are selling cars at much lower prices and this reportedly forced Tesla to junk plans about its cheap car, Reuters claimed.
However, taking to X, Musk posted, “Reuters is lying.”
In the meantime, Tesla stock fell as much as 6.2% on Friday.
A number of analysts reacted to the Reuters report today. Among them was Dan Ives, Analyst at Wedbush Securities, who said, "This would be a dark cloud moment for Tesla. Would be a nightmare if this was scrapped. This would be a major gut punch for the Tesla bull thesis over the next few years."
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If true, this would be a significant retreat for Musk who had been promising an affordable car for quite some time. The idea was to make electric cars accessible to more people and perhaps expand successfully through it globally. However, Tesla's cheapest car currently available, the Model 3, still comes with a hefty price tag of around $39,000. The planned cheap car, perhaps to be named or referred to as Model 2, was expected to be priced at about $25,000. In fact, Chinese EVs are going at just around $10,000.
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From making cheaper cars, Tesla is shifting its focus to developing self-driving taxis, Reuters reported. Musk has indicated that these taxis will play a crucial role in the future of transportation. This decision was finalized sometime in February.
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{{/usCountry}}From making cheaper cars, Tesla is shifting its focus to developing self-driving taxis, Reuters reported. Musk has indicated that these taxis will play a crucial role in the future of transportation. This decision was finalized sometime in February.
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{{/usCountry}}So, what happens to Musk’s ambitious growth plans that had targeted selling of 20 million cars by 2030. The cancellation of a mass consumer vehicle means it is unlikely to happen. That is if the plan has actually been junked.
Tom Hayes, Chairman, Great Hill Capital, says, “The (news) confirms what we've been saying for some time, that it's unclear whether consumers actually want EVs or Teslas. It's a business that's been subsidized by the government and even with the subsidies, they're not as attractive as imagined."