Is Tesla’s small car under threat?

Tesla may be having second thoughts on its entry-level electric car, the so-called Model 2, according to Reuters.

The long-promised new model line was meant to be entering production in the second half of next year. It was also tipped to come to market at a price (circa $US25,000) that would rival the likes of the BYD Dolphin and MG 4 EV.

However, Reuters says the project has been put on hold. Moreover, the platform set to underpin the EV may now be used instead for autonomous robo-taxis. The likely reason for second thoughts is that Chinese companies are flooding the major markets with cheap EVs.

Tesla refused to comment on the Reuters report but Musk responded on his social media platform, X, saying that this is not the case and Reuters have got it wrong.

The original plan had the small EV launching once the luxury EVs were up and running, using the profits from these to fund an electric car for the masses. At one point, Tesla suggested it would be able to sell 700 million examples of the so-called ‘Project Redwood’ car during its lifetime.

Tesla indicated the Model 2’s success would rely on a new production process called Unboxed. This facilitates assembly down the production line, avoiding any unnecessary disassembly of the car or its components, during the building process. Seats, for example, would mount directly to the battery pack and the whole assembly would be raised into the already painted bodyshell. This avoids the need for removing and reinstalling the doors. 

The platform itself is not shared by any other model and the new Tesla would have been produced initially in Germany. 

Reuters indicates that this production process will instead be applied to the  autonomous ride-hailing vehicle. It will not be produced in the same mass market volumes.