Chinese EV competition could pose a threat to Tesla’s affordable car ambitions

Tesla’s CEO Elon Musk has reportedly cancelled plans to launch a cheaper Model 2, according to a recent report by Reuters. The decision was allegedly communicated to Tesla employees during an all-hands meeting in late February. However, Musk took to social media to refute the claims, calling the report by Reuters “lying (again).”

For years, Musk has been promising an affordable electric vehicle priced at $25,000 to appeal to a wider customer base. In interviews and events, Musk has reiterated his commitment to producing a more affordable EV, with plans to eventually manufacture over 20 million of these vehicles within a year.

The company’s new EV platform, which the cheaper Model 2 was supposed to be built on, is still under development. Musk mentioned during an earnings call earlier this year that production is targeted for the end of 2025, but warned of potential delays due to manufacturing complexities.

The shift in strategy away from a cheaper Model 2 may be influenced by increasing competition from Chinese automakers offering more affordable EVs. Musk has expressed concerns about the impact of Chinese companies selling cheap EVs in the US, stating that it could be detrimental to domestic automakers like Tesla.

Despite the cancellation of plans for a cheaper Model 2, Tesla remains focused on bringing its next-generation platform to market, with production slated to begin at Gigafactory Texas. The platform is expected to revolutionize the manufacturing process for vehicles.