An exclusive Reuters report reveals some senior Tesla executives were alarmed last year when CEO Elon Musk publicly denied canceling the company’s highly anticipated $25,000 electric vehicle, internally known as the Model 2, despite having already shut down the project, according to multiple people familiar with the matter.
Musk posted “Reuters is lying” on X just minutes after the April 5, 2024, report claimed Tesla had scrapped the low-cost EV in favor of prioritizing self-driving robotaxis. The post helped contain a 6% drop in Tesla’s stock, which closed down 3.6% that day.
Privately, executives were aware the Model 2 project had been shelved weeks earlier. Musk’s contradiction left managers confused, prompting some to ask if he had changed his mind. He had not. The project remained canceled, sources said, and employees had already been informed.
The internal concerns highlight Tesla’s ongoing struggle to deliver on a longstanding promise to develop an affordable mass-market EV, a key goal investors believed was central to the company’s growth strategy.
While some executives were troubled by the inconsistency between Musk’s public and private stance, others were less concerned, citing Tesla’s flexible approach to product planning. Still, the denial created uncertainty for suppliers and investors, who had expected a $25,000 Tesla as part of their long-term projections.
Tesla has not formally confirmed the cancellation of the all-new EV, but a year later, the vehicle remains unreleased. Instead, the automaker is preparing lower-cost variants of the existing Model 3 and Model Y for launch in 2025. Those vehicles will be produced using current manufacturing lines, not the new platform previously promised for the $25,000 model.
On Tesla’s April 2025 earnings call, Engineering Head Lars Moravy confirmed that the company’s next affordable offerings would “resemble in form and shape the cars we already make.” No pricing has been announced, and the models have been delayed from initial timelines.
Meanwhile, Tesla’s product lineup has aged, and sales have declined. The company reported its first annual drop in vehicle deliveries in 2024, with a 13% decline in the first quarter of 2025. Chinese automaker BYD overtook Tesla in European EV sales in April and continues to gain ground globally with sub-$10,000 EVs, such as the Seagull hatchback.
Further complicating matters, some executives expressed concern that Musk’s public denial of the Reuters story could attract scrutiny from the U.S. Securities and Exchange Commission (SEC). The $25,000 EV had been baked into many investor forecasts, and misleading statements about future product lines could violate regulatory agreements.
Musk’s 2018 settlement with the SEC requires pre-approval of social media posts related to key business developments. According to sources, Musk loathes the settlement and does not submit posts for legal review, raising questions about compliance.
On the same day as his denial, Musk announced a robotaxi unveiling set for August 8 — a plan not widely shared within Tesla. The so-called “Cybercab” eventually debuted in October but failed to impress investors.
