Tesla has Allegedly Canceled the Affordable Electric Vehicle known as the Model 2

Key Highlights

• Tesla cancels Model 2 to focus on Tesla Robotaxi development due to Chinese competition.

• Elon Musk's $22,000 EV plan was shelved in favor of Robotaxi production.

• Model 2 delay expected, the new platform set for Gigafactory Texas.

• Chinese automakers pose a threat to Tesla's market dominance.

• Funds redirected to the Robotaxi project; Tesla aims for 1M FSD cars by mid-2020.

According to Reuters, Tesla has stopped working on the Model 2, a cost-effective electric car, to focus on developing a robot-taxi service. This move comes as a response to strong competition from Chinese automakers. The decision was announced to employees during a company-wide meeting held in late February.

Elon Musk promised to introduce an inexpensive electric vehicle priced at $22,000 to make plug-in cars more appealing. During Tesla's 2020 Battery Day event, Musk outlined plans to produce up to 20 million of these vehicles annually, exceeding the production levels of major automakers like Volkswagen, Toyota, and GM.

Elon Musk revealed plans for a budget-friendly electric vehicle to be built on Tesla's next-generation platform, targeting production starting in late 2025, albeit with potential delays. Tesla emphasized its manufacturing innovation at Gigafactory Texas alongside this announcement. Despite Elon Musk's criticism of Reuters for inaccuracies, he did not respond to the firm's request for comment.

Tesla altered its approach due to fierce competition from Chinese automakers, according to Musk. He highlighted the threat posed by Chinese EVs to domestic manufacturers in the absence of trade barriers. Despite Tesla's emphasis on high-end models like the Cybertruck, Chinese firm BYD surpassed Tesla's electric vehicle production in 2023. BYD manufactured approximately 3.02 million EVs compared to Tesla's 1.81 million units that year.

Tesla has decided to reallocate the resources intended for the Model 2 electric car towards the development of a Tesla robotaxi. The company aims to have approximately one million cars equipped with Full Self-Driving (FSD) capabilities for autonomous driving by mid-2020. However, it's important to note that Teslas with FSD still require driver attention and are not completely autonomous.

Verdict

Tesla's decision to cancel the Model 2 in favor of focusing on the development of a Tesla robotaxi reflects its strategic shift amid increasing competition in the electric vehicle market, particularly from Chinese automakers. The company aims to prioritize the advancement of autonomous driving technology, aiming for a substantial fleet equipped with Full Self-Driving capabilities. This move underscores Tesla's commitment to innovation and staying at the forefront of the rapidly evolving automotive industry.

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