Has Tesla Put Model 2 on the Scrap Heap?

It would appear that Tesla is driving in a new direction, down a robotics road. The autonomous Robotaxi is taking precedence over an affordable electric car for the people.

Tesla boss Elon Musk confirmed the change of direction at a Tesla Q3 earnings call recently. He stated “I think we’ve made it very clear that the future is autonomous.

“I think having a regular 25k [dollar] model is pointless. It would be silly. It would be completely at odds with what we believe”. Having said all that, he didn’t confirm absolutely that the Model 2, which which will supply the platform for the Robotaxi, is on the rocks.

The so-called Model 2 baby electric car was expected to be a pared-back, compact take on the brand’s current models. Tesla released a teaser image of the electric city car last year, showcasing its curving roofline. It essentially embraced the familiar design language found on the Model 3 and Model Y. 

The Robotaxi will henceforth be Tesla’s affordable small vehicle, it would seem. That is still two years away from launch, predicted to be the end of 2026. At around $US30,000 (£23,000), the Robotaxi will be slightly more expensive than Model 2.

Tesla’s existing models will be updated on an ongoing basis. Next year sees the release of the facelifted Model Y SUV (Project Juniper). If it is anything like the Model 3 on the price front, it could drop further when it hits the market in Q1 of 2025.

However, with the decrease in EV buying interest and governments in the U.S. and EU delaying approvals of self-driving robo-taxis, it could trigger a further decline in Tesla stocks. After the Robotaxi reveal, shares fell on lack of detail and the fact that the model is not going into production for another two years. 

But there has been a recent share price bump after better than expected Q3 earnings. Musk’s positive outlook for 2025 – when he mentioned lower cost models – also helped but the shares are still down by about one-third on 2021 levels.