Report: Elon Musk may have killed Tesla's most appealing product

Fast Facts

• Reuters reported that Tesla has canceled its highly-anticipated low-cost electric vehicle project. 
• CEO Elon Musk has said in the past that Tesla was "quite advanced" in its work on a low-cost EV. 
• Shares of Tesla fell more than 3% following the report. 

Tesla  (TSLA) , according to a Reuters report, has canceled its highly-anticipated low-cost electric vehicle project. 

Reuters, citing three unnamed sources familiar with the situation, as well as internal company documents, said that the decision to scrap the cheaper model came in February. Part of the move, according to the report, involves an internal pivot to focus more of the company's attention on developing a fleet of robotaxis. 

Messages, reviewed by Reuters and sent from Tesla program managers, said that "suppliers should halt all further activities" related to the project. 

Tesla did not immediately respond to a request for comment, though its CEO, Elon Musk, wrote in a post on X: "Reuters is lying (again)." 

Shares of Tesla fell more than 3% following the report. 

Related: Tesla investors should be pleased with Elon Musk's latest big claim

The sub-$25,000 EV

Musk started talking about a cheaper EV in 2022, and in 2023, he unveiled Tesla's next-generation platform, which he said would be used to produce that cheaper vehicle, in addition to Tesla's planned fleet of robotaxis. 

"We are working on a low-cost electric vehicle that will be made at very high volume. We're quite far advanced in that work," Musk said in December. "I view the production line plans for that every week and I think the revolution in manufacturing that will be represented by that car will blow people's minds."

"It's not like any car production line that anyone's ever seen," he added. 

Deepwater Management's Gene Munster has said that such a vehicle could "double Tesla's business."

The Future Fund's Gary Black has said often that a cheaper vehicle, in the range of $25,000 to $30,000, would be a major catalyst for the stock. 

Tesla's apparent decision to axe a car that was designed to be more accessible, with pricing on par or below gas-powered competitors, comes just a few days after Tesla published weaker-than-expected delivery numbers for the first quarter of 2024. 

Wedbush's Dan Ives last year predicted that this cheaper vehicle would be released by the end of this year. He said it would "drastically change the ... game" for the company. 

Shares of Tesla have retreated more than 35% this year, on falling EV demand, weakening margins, delivery numbers, and, according to one investor, Musk's behavior. 

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