Tesla has promised to start selling cheaper models next year, days after a Reuters report revealed that the company had shelved its plans for an all-new Tesla that would cost only $25,000.
Amid declining sales and profits, Tesla’s decision to scrap the Model 2 coincided with layoffs. Reuters highlighted rising competition from Chinese EV manufacturers.
In the first quarter, Tesla’s deliveries plummeted, marking the first annual decline since the pandemic’s onset in 2020. Despite price reductions, they fell short of analyst predictions, indicating intensifying competition in the EV market.
Despite a 50% profit decline, Tesla responded with a positive announcement. It plans to expedite the launch of new, more affordable models. These would be produced on its existing platform and rolled out in the second half of 2025, per the BBC.
Reuters cited the company as warning that this change of plans could “result in achieving less cost reduction than previously expected,” however. This suggests the price tag of the new models is unlikely to be as small as the $25,000 promised for the Model 2.
Tesla is also cutting prices, as many other EV makers are doing amid a palpable decline in sales in key markets such as Europe, where the phaseout of subsidies has hit demand for EVs seriously. The cut is of about $2,000 on all models that Tesla currently sells.
The cancellation of the all-new Model 2 underscores Tesla’s ongoing struggle to balance innovation with affordability. However, Tesla remains determined to prioritize the development of Affordable Tesla Cars. By halting the Model 2 project, Tesla aims to refocus its resources on creating electric vehicles that meet the needs of budget-conscious consumers. This strategic shift reflects Tesla’s commitment to expanding its market reach and making sustainable transportation options accessible to more people.
Despite the setback of shelving the all-new Model 2, Tesla’s promise of Affordable Tesla Cars remains steadfast. The company’s decision to prioritize affordability underscores its dedication to democratizing electric vehicles.
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