Tesla is reported by Reuters to have abandoned plans to produce a low-cost electric car in the United States and Europe, despite Elon Musk's long-held ambition to do so.
Reuters reports that the decision to abandon the budget EV plan has been confirmed by three different industry sources, and the agency says it has also seen company messages outlining the shift in direction.
Its report says the production platform originally intended to produce the small car will instead be used to build self-driving robo-taxis.
Just over three months ago, Elon Musk told investors production of the car would begin by the end of next year, with a price of about $25,000.
Tesla refused to comment on the report to Reuters or when later approached by Autocar magazine in the UK, with Elon Musk posting on X that Reuters was "lying".
Tesla, like every other major Western car manufacturer, is facing fierce competition from Chinese manufacturers which are ramping up exports as China's economy struggles.
Recently we reported that BYD - perhaps Tesla’s greatest source of competition - would likely win the race to introduce a budget electric car ahead of any other company.
The company currently sells its smallest car - the Seagull - for $10,000 in China and has ambitions to sell it in Europe, including Ireland, with a maximum target price of about €25,000. It will be in Ireland by next January, but won't have the Seagull name here.
In many countries, including Ireland, EV sales have been hit by high prices, charging infrastructure challenges and people opting for hybrid cars as a bridging measure while they wait for prices to come down, the charging network to improve and batteries to have longer ranges. Lack of home charging facilities for many people is also cited as a concern.
Toyota, the current market leader in Ireland, saw its recent sales pattern reflect a 95% demand for hybrid cars.
"I’m not sure any manufacturer can strongly compete with the likes of BYD and MG right now and in the near future. They are producing cars at attractive prices, that have good ranges and are well equipped, while other manufacturers are still struggling with the financial and engineering challenges of moving from petrol and diesel production to full EV production. The Chinese didn't have to do that. They just went straight into EV production and the results are clear. This is all making a lot of people nervous", one Irish motor industry insider told me.
Both the US government and the EU are examining the effects of Chinese competition on their domestic car companies.
Previously Elon Musk championed a small electric car for the mass market but this latest development would appear to confirm just how great the competitive threat now is.
It will also be interesting to see what impact the Tesla decision may have on the plans several European manufacturers have for producing budget electric cars in the coming years.
