Former Tesla CEO Slams Elon Musk's Reported Decision To Scrap Cheaper Car Project: 'That's A Shame, They Might Want To Rethink'

In a recent turn of events, Martin Eberhard, co-founder and former CEO of Tesla Inc. TSLA, has voiced concerns regarding the company’s direction in the electric vehicle (EV) market, particularly its move away from developing affordable EV options.

What Happened: At the HSBC Global Investment Summit in Hong Kong, Eberhard spoke about Tesla’s rumored decision to cancel the Model 2 project, which was aimed at creating an affordable EV to compete with lower-cost Chinese models, Bloomberg reported on Tuesday.

"That's a shame, they might want to rethink that. It seems like a better market than that gigantic truck they make,” he said.

He criticized Tesla’s prioritization of high-end products like the Cybertruck over more accessible vehicles and pointed out the competitive EV lineup from China’s BYD Co., including the Seagull hatchback. Reuters had previously reported that Tesla had scrapped plans for the cheaper vehicle, a claim that Elon Musk responded to with a cryptic emoji on social media.

Eberhard also touched on the broader EV market, mentioning Toyota Motor Corp.‘s late entry and his observations of BYD. He stressed the importance of cost-focused strategies for Tesla and the challenges in battery technology and cost reduction.

"It's important to understand that the automotive space is not like Silicon Valley in the sense that this is not a space in where there is a winner-takes-all technology," he said.

"We can have a dozen different cars companies around the world making a dozen different types of cars, meeting different positions in the market and all succeeding."

See Also: Cathie Wood’s Ark Invest Doubles Down On Tesla Despite 3.6% Plunge Amid Model 2 Rumors, Adds $22M Worth O

Why It Matters: Recent reports have highlighted the competitive landscape of the EV market, where Tesla is facing intense competition from Chinese manufacturers like BYD. The Chinese company overtook Tesla as the world’s largest battery EV manufacturer in Q4, despite a year-over-year increase in Q1 deliveries.

Furthermore, an industry comparison from March placed Tesla against its competitors, underscoring the necessity for the company to maintain its market standing and growth prospects.

Amid speculation about the low-cost EV project’s status, Tesla’s chief designer hinted at ongoing development, following Musk’s denial of the project’s cancellation.

Additionally, Tesla’s sales figures in China, which saw a modest increase in March, could be a vital indicator of the company’s global performance.

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