Elon Musk’s Tesla to unveil ‘robotaxi’ on August 8; scraps low-cost car plans

In a dramatic turn of events, Tesla has announced the cancellation of its long-anticipated affordable car, a move that has left investors reeling and cast doubt on the company's trajectory towards mass-market dominance. Sources familiar with the matter, as well as internal communications seen by Reuters, confirm the abandonment of the much-hyped project, which aimed to make electric vehicles accessible to the masses.

The decision marks a significant departure from Tesla CEO Elon Musk's longstanding vision, which prioritised the development of affordable electric cars as the cornerstone of the company's mission. Musk's original strategy, outlined in 2006, outlined plans to produce luxury models initially, with profits funding the creation of a low-cost family car.

Despite Musk's repeated assurances to investors and consumers, including recent promises of production commencing in the second half of 2025, the affordable model, often referred to as the Model 2, has been scrapped indefinitely. Instead, Tesla will focus its efforts on advancing self-driving robotaxis, utilising the same small-vehicle platform.

Meanwhile, Elon Musk said in a post on social media platform X on Friday that Tesla will unveil 'Robotaxi' on August 8.

The abrupt change in direction has sent shockwaves through the market, with Tesla shares plummeting over 6% in response to the news. Musk's subsequent social media posts, dismissing the Reuters report as "lying," provided some relief to shareholders, but uncertainty lingers regarding the company's strategic pivot.

The decision to abandon the affordable car project underscores Tesla's escalating challenges in an increasingly competitive landscape, particularly against Chinese electric-vehicle manufacturers offering significantly lower-priced alternatives. While Musk envisions driverless robotaxis as the future of mobility, the transition presents formidable engineering and regulatory hurdles.

Sources familiar with Tesla's internal discussions reveal that the decision was communicated to employees in late February, with directives to focus exclusively on robotaxis. Plans for the entry-level vehicle have been shelved, with production volumes drastically reduced compared to initial projections.

The cancellation of the affordable car project deals a blow to Tesla's ambitious sales targets, which aim to rival the output of industry giants like Toyota by 2030. With the demise of the Model 2, achieving these goals becomes increasingly uncertain, casting doubt on Tesla's future trajectory.