Elon Musk’s denial of Tesla ending its $25k EV project divided the automaker’s executives, report states
Company documents and three people familiar with the matter say that Elon Musk raised significant concerns among some Tesla executives when he denied rumors of the automaker canceling its $25,000 electric vehicle (EV) project after the initiative was known as dead within the organization for weeks. On April 5, 2024, Musk posted on X, formerly Twitter, “Reuters is lying (again),” after the publication reported Tesla’s affordable EV, nicknamed the Model 2, as canceled. Reuters’s Model 2 report triggered Tesla stock declines, but those losses didn’t extend beyond 6% after Musk’s denial on X. Musk reversed course months later during Tesla’s Q3 earnings call in October, saying: “Basically, having a regular $25K model is pointless. It would be silly. It would be completely at odds with what we believe,” according to Road & Track. The new Reuters report claims executives not only knew that Tesla was pivoting from the Model 2 weeks before Musk denied the project’s cancellation, but also expected the robotaxi to take its place.
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Some confused executives asked Musk whether he had changed his mind about ending the Model 2 initiative, to which the Tesla CEO is said to have replied that the project was still over. Other Tesla executives grew concerned about how investors and suppliers would react given their expectation of a new, more affordable vehicle, and feared the denial would hurt Tesla’s sales since some were delaying purchases in hopes of a $25,000 EV. The Securities and Exchange Commission (SEC) might even view the statement as misleading investors about a future project that was part of the company’s forecasts. Musk already settled with the SEC in 2018 for $40 million over a social media post, which the SEC claimed misled investors into thinking the billionaire would take Tesla private. Still, Musk’s public denial didn’t bother all Tesla executives, as some cited the automaker as considering various strategies for low-cost EVs over the years. Autoblog reached out to Tesla for comment but didn’t receive a response.
Tesla’s new plans for more affordable EVs
Earlier this year, Tesla confirmed its updated approach of using pre-existing model platforms to accelerate the release of new vehicles, including affordable cars, one of which was supposed to be a cheaper version of the Model Y, nicknamed E41, and the other being a stripped-down Model 3. However, the stripped-down Model Y will cost more than the originally planned $25,000 price tag, and Reuters’s three sources state its US launch is being delayed with an updated release target of late 2025 or early 2026. Reliable reports haven’t yet emerged about a stripped-down Model 3’s production timeline and pricing. Late last week, a video was posted of a white Tesla SUV driving around the automaker’s Fremont, California factory track with its front and rear covered, possibly indicating E41 trials. Tesla Newswire reposted the footage on X.
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Final thoughts
Referenced in some of our previous articles on Tesla, Autoblog interviewed viral YouTuber and mechanic Scotty Kilmer, who seemed to sum up Musk’s decision to publicly deny the Model 2’s cancellation by saying: “Value to him [Elon Musk] is stock market value. Stock market value isn’t real value. It’s pumped-up stuff. It used to be that the stock market was an investment. It isn’t anymore. It’s just outright riverboat gambling. His [Elon Musk] stock can go up billions of dollars or go down billions of dollars with whatever he says.” Since Musk’s denial of the Model 2’s end stopped a stock slide, it seems the Tesla CEO’s public statement prioritized damage control instead of buyer and investor transparency.