Tesla (NASDAQ:) is said to have canceled its low-cost car plans, according to a report by Reuters on Friday.
Citing sources and company messages it has seen, the publication stated that Tesla will continue to develop self-driving robotaxis on the same small-vehicle platform.
Investors had been hoping that Tesla would build a more affordable model to drive growth. However, it now seems that this longstanding goal has been abandoned.
Tesla shares are down more than 5% following the report.
In January, Tesla CEO Elon Musk said the electric vehicle giant intended to start production of the affordable model in the second half of 2025. Before today’s news, the entry-level vehicle was expected to start at about $25,000.
The change in plans from Tesla comes as the company faces increased competition and a slowdown in electric vehicle demand that has already impacted the business this year.
According to Reuters, the decision to abandon the low-cost model was revealed in a company meeting in late February, with Elon Musk reportedly issuing a directive to ‘go all in on robotaxi.’