How Elon Musk’s denial of scrapping this project may have been concerning for some Tesla executives

Several senior

Tesla

executives were reportedly surprised when CEO Elon Musk publicly denied that the company had scrapped the plan to build a cheaper EV last year. In April 2024, the tech billionaire dismissed a report by the news agency Reuters that alleged that the car maker had cancelled its plans for an all-new $25,000 electric vehicle, a project many investors believed would significantly drive sales growth, sources familiar with the matter claimed. According to the latest Reuters report, the executives knew that Musk had decided to shelve the low-cost car, often referred to as the "Model 2," weeks before last year’s report. They were aware that Tesla's strategic focus had shifted towards developing self-driving robotaxis, the new report claims. As per the original Reuters report, which cited three sources and company documents to highlight that Tesla had already informed employees that the affordable EV project was terminated. However, Musk's public denial came minutes after the Reuters story was published last year. He took to the social media platform X (formerly Twitter) to claim "Reuters is lying," a statement which reportedly stopped a 6% slide in Tesla's stock.

How Elon Musk’s denial may have confused some Tesla executives

The company CEO's contradictory public stance reportedly confused some senior managers. These executives directly questioned Musk, asking if his public denial signalled a reversal of his decision to cancel the Model 2, the report added. However, these tech billionaire dismissed their concerns and reaffirmed that the affordable EV project remained dead, according to the sources.

This internal confusion sheds new light on the company's struggles and internal communications surrounding its commitment to delivering a mass-market, low-cost electric vehicle, long considered a cornerstone of Tesla's promise for widespread EV adoption and future growth, the report notes. The executives' concerns, which have not been previously reported, also highlight internal reactions to Musk's handling of the situation, the report adds.The report also notes that Tesla has shifted plans for its $25,000 electric vehicle. Originally intended to be a brand-new model on a fresh platform with innovative manufacturing, the company will now release more affordable, simplified versions of the existing Model 3 and Model Y. These vehicles, expected in the first half of 2025, have faced delays, and pricing details haven’t been revealed. Tesla confirmed in an investor update that new, affordable models are still in the works and will use current manufacturing lines.