Even as Tesla, Inc. TSLA shares took a beating from confirmation regarding a round of massive layoffs, including those of high-profile executives, a new report said on Monday the electric- vehicle maker has in fact put on hold the development of its low-cost vehicle.
What Happened: Tesla has stalled the development of the proposed $25,000 EV, which the Street referred to as Model 2, said Electrek, citing sources familiar with the matter. The report said internally, the project was codenamed NV9.
The report comes close on the heels of CEO Elon Musk denying a Reuters report that said the U.S. EV giant is scrapping the project.
The Electrek report said the rumored postponement of the project is due to the company’s decision to deploy all resources on hand to the self-driving project. Incidentally, Musk told his Giga Austin team in December that expanding the factory for the manufacturing of the new cheaper, next-gen model was a priority for 2024, the report added.
However, the project has been completely defunded now and many people involved in the project were part of the layoffs announced Monday, the report said. The billionaire is now reportedly focusing on the south expansion of the Giga Texas, which will likely house a giant data center for the robotaxi project but it is already behind schedule, casting doubts on whether it can be completed by the August deadline Musk has set.
See Also: Everything You Need To Know About Tesla Stock
Why It’s Important: Tesla said in its fourth-quarter earnings report, “We are focused on bringing the next generation platform to market as quickly as we can, with the plan to start production at Gigafactory Texas.” The company said then the platform will revolutionize how vehicles are manufactured.
Musk also said on the earnings call that he was really excited about the low-cost EV and that it would be manufactured first in Giga Texas and then in Giga Mexico followed by expansion elsewhere. He also gave a second-half of 2025 start-of-production timeline for the vehicle.
CFO Vaibhav Taneja said then that volume growth in the near term will slacken as the company channelizes the team’s focus on the launch of the next-generation vehicle.
Reports suggest the company was looking at two vehicles based on the platform – a low-cost vehicle and a steering-less car for the robotaxi service geared for the full autonomy.
Musk confirmed earlier this month that robotaxi unveil will be on Aug. 8.
Commenting on the Electrek report, Future Fund’s Gary Black said, “This is not good for $TSLA P/E if true.”
Tesla bull and Wedbush analyst Daniel Ives said in a note last week that "Robotaxi is not the answer for now; Model 2 needs to be on the Tesla blueprint.” As the company is left to navigate through the Category 5 demand storm, a key part of the future growth story for it, is the Model 2 vehicle and sub-$30,000 price point that will likely drive mass demand globally, he said. The analyst also estimated that about 60% of Tesla’s future growth would come from the proposed EV.
Teala ended Monday’s session down 5.59% at $161.48, according to Benzinga Pro data.
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