Tesla Cancels Plans To Build Entry-level Car; Focuses on Robotaxis 

Stiff competition from Chinese brands in the affordable EV segments may be a reason

The American EV manufacturer Tesla has abandoned plans to build its much-anticipated budget car. The decision retracts Tesla’s CEO, Elon Musk’s promise to build an affordable, entry-level electric car for the masses.

In January 2024, Musk told Tesla investors that the plan was to start production of the affordable model at its Texas factory in the later half of 2025. Currently, Tesla’s least expensive model, the Model 3, retails under USD 39,000 in the States. The entry-level vehicle, often referred to as the Model 2, if it went into production was expected to start at about USD 25,000.

In 2020 Musk stated that Tesla wanted to sell as many as 20 million vehicles by 2030, which is twice as many as the world’s largest manufacturer Toyota. With the early demise of the budget-car project, called NV91 internally and H422 externally, it’s not clear how this can be accomplished. But sources indicate that that Tesla’s plans may change depending on economic factors.

Chinese automakers dominate budget EV market

The withdrawal of the plans to build the budget car comes as Tesla faces tough and increasing competition from Chinese electric-vehicle manufacturers. BYD, a major competitor in the EV space already offers a range of low- and mid-range models, including its Seagull hatchback for less than USD10,000. The Chinese automaker now plans to sell the vehicle in international markets for more than double that price, a number that still manages to undercut Tesla’s budget vehicle price significantly. Also, Tesla reported an 8% year-over-year drop in vehicle handovers, while BYD, reported a 13% gain.

Tesla turns its focus to Robotaxis

Meanwhile, Tesla will continue developing self-driving robotaxis on the same small-vehicle platform. Musk posted on X: “Tesla Robotaxi unveil on 8/8,” He has predicted a future of mobility in which driverless taxis would be favoured over human-driven cars. He has also said that Tesla would be “worth basically zero” without achieving full self-driving capability. But the specifics of the timeframe and business model for Tesla’s robotaxis are yet to be announced. Currently, only the American and Chinese governments have approved experimental use of driverless cars on public roads.

Source: Reuters

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