Incorrect promises for a cheap model ensure contradictory signals at Tesla. The group seems to be striving for a change of strategy.
• Incorrect promises to cheap Tesla model
• contradictory signals
• Tesla may be aiming for a change of strategy
In April last year, a report by the Reuters news agency caused unrest at Tesla. According to the report, the company had hired the development of an inexpensive electric vehicle – internally and externally as “Model 2”. The vehicle was originally positioned as a milestone for Tesla’s growth strategy, with a desired entry price of around $ 25,000. Shortly after the publication, Tesla CEO pointed out Elon Musk However, the reporting is publicly back via X and explained: “Reuters lies (again)”.
Reuters is lying (again)
– Elon Musk (@elonmusk) April 5, 2024
The Tesla share, which had lost around six percent immediately after the report, partially recovered after Musk’s comment, but still closed with a daily minus of 3.6 percent.
As Reuters reported, citing information from the matter familiar with the matter, Musks Dementi should not have been without controversy internally. At this point, several managers had known that the project had already been stopped a few weeks in advance and Tesla deflected the resources on the development of autonomous robotaxis. After his public contradiction, some of these managers are said to have addressed the discrepancy directly, but he had confirmed that the project would continue to be pursued.
Unclear communication and effects on investors
The contradictory signals raised questions – both within the company and with investors. Managers reported to confidants that they assessed the situation as problematic, in particular with regard to the expectations of the public and the capital markets, as it was said at Reuters. Analysts had already included Model 2 in its forecasts. There was concern that the confusion could unsettle potential buyers and impair future sales if customers are waiting for a cheaper model that is actually no longer planned.
In addition, there were occasional concerns about possible consequences on the part of the US stock exchange supervision Sec. Musk’s statement that the project was not hired could be considered misleading – especially since similar incidents had already had a negative impact on the company in the past. In 2018, after a also controversial statement about a possible stock exchange from Tesla, Musk had reached an agreement with the SEC and accepted a fine of $ 40 million.
Strategy change to existing platforms
In the course of the internal realignment, instead of a completely new model, the introduction of simplified versions of the existing vehicles Model 3 and Model Y. These are expected to come onto the market in the course of 2025, and a specific price has not yet been mentioned. At an investor conference in April, Tesla’s technology chief Lars Moravy confirmed that the new vehicles would take up existing designs, but should be offered at a lower entry price.
In a later update to investors, Tesla explained that new, more affordable models were still planned – but based on existing production lines, and not as a completely new vehicle platform.
Changed market conditions and growing competition
The departure from an independent, cheap model comes at a time when Tesla is confronted with falling sales figures and increasing competition. In 2024, the company recorded a decline in annual sales for the first time. In the first quarter of 2025, sales fell by 13 percent compared to the same period last year. In the European market in particular, Tesla loses market shares to the Chinese manufacturer BYD, which for the first time sold more vehicles in Europe in April 2025 than Tesla. BYDS entry-level model Seagull is offered in China for less than $ 10,000 and also sold in export markets at competitive prices.
Tesla seems to be at a strategic turning point. While the company publicly seems to record the vision of an affordable electric vehicle, internal information indicates a clear departure from the originally planned model 2. Instead, the company seems to be relying on cost reduction through simplification of existing models and increased orientation towards autonomous vehicles. However, communication of this course change seems unclear. In view of the increasing competitive pressure, especially from China, it should be decisive how Tesla will design its positioning in the market in the future.
Editor finance.net
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