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Tesla boss Musk: “Master plan” for cheap electric car apparently failed

Photo: Gonzalo Fuentes / REUTERS

Tesla's plans to bring an inexpensive electric car onto the market are apparently not coming to fruition. This is reported by the Reuters news agency, citing three sources familiar with the matter and company news. The company is thus abandoning a long-standing goal that Tesla boss Elon Musk often described as its main task: producing affordable electric cars for the masses.

The automaker will therefore continue the development of self-driving robotaxis on the same platform for small vehicles, the sources said. Musk's first "master plan" for the company in 2006 was to first produce luxury models and then use the profits to finance a "low-cost family car."

Since then, Musk has repeatedly promised investors and consumers such a vehicle. Just in January, he told investors that Tesla planned to start producing the affordable model at its Texas factory in the second half of 2025.

Tesla currently offers the Model 3 sedan as the cheapest model in its production. It costs around $39,000 in the USA. The affordable model, sometimes referred to as the Model 2, was expected to start at around $25,000.

Tesla did not initially respond to a request for comment. After the Reuters report, the group's shares initially fell by more than five percent on Friday.

The stark reversal comes as Tesla faces fierce competition worldwide from Chinese electric vehicle makers, which are flooding the market with cars priced as low as $10,000. The driverless robotaxis plan, which could take longer to implement, poses a greater technical challenge and higher regulatory risk.

High ambitions for sales growth at risk

Two people familiar with the plans told the news agency they learned of the decision in a meeting attended by numerous employees. One of the two insiders said the meeting took place at the end of February. "Elon's directive is to put everything on Robotaxi," this person said. Suppliers should therefore not initially be notified about the discontinuation of the project.

The plans for the affordable Tesla were seen as key to fulfilling Musk's lofty sales growth ambitions. Musk said four years ago that Tesla wanted to sell 20 million vehicles by 2030 - twice as many as the world's largest automaker Toyota sells today. With the failure of the Model 2, it's unclear how he plans to accomplish this.

eru/Reuters