Also as Tesla, Inc. TSLA Shares have been hit by confirmation of a series of massive layoffs, including those of high-profile executives, as the electric vehicle maker suspended development of its low-cost vehicle, a new report said on Monday.
What happened: Tesla has halted development of the proposed $25,000 electric vehicle, which The Street has called the Model 2, Electrek said, citing sources familiar with the matter. The report states that internally the project was codenamed NV9.
The report comes close on the heels of the CEO report Elon Musk denying a Reuters report that the American electric vehicle giant is abandoning the project.
The Electrek report states that the alleged postponement of the project is due to the company’s decision to use all available resources for the autonomous driving project. Incidentally, Musk told his Giga Austin team in December that expanding the factory to produce the new, cheaper next-generation model was a priority for 2024, the report adds.
However, the project has now been completely cut and many people involved in the project were part of the layoffs announced on Monday, the report said. The billionaire is now reportedly focusing on the southern expansion of Giga Texas, which will likely house a giant data center for the robotaxi project but is already behind schedule, raising doubts about whether it can be completed by Musk’s August deadline.
See also: Everything you need to know about Tesla stock
Because it is important: Tesla said in its fourth-quarter earnings report: “We are focused on bringing the next-generation platform to market as quickly as possible, with the plan to begin production at Gigafactory Texas.” The company said the platform will revolutionize the way vehicles are produced.
Musk also said during the earnings call that he was really excited about the low-cost electric vehicle and that it would be produced first in Giga Texas and then in Giga Mexico, followed by expansion elsewhere. He also provided a timeline for the vehicle to start production in the second half of 2025.
CFO Vaibhav Taneja He said that near-term volume growth will decline as the company focuses the team’s attention on the launch of the next-generation vehicle.
Reports suggest that the company was looking at two vehicles based on the platform: a low-cost vehicle and a non-steering car for robotaxi service geared towards full autonomy.
Musk confirmed earlier this month that the robotaxis will be unveiled on August 8.
Commenting on the Electrek report, Future Fund’s Gary Black said, “If true, this would not be good for P/E $TSLA.”
Tesla bull and Wedbush analyst Daniel Ives he said this in a note last week “Robotaxi is not the answer for now; Model 2 must be included in the Tesla project.” While the company is left to navigate through the storm of Category 5 demand, a key part of its future growth story, it is the Model 2 vehicle and sub-$30,000 price point that will likely drive mass demand globally, he said the analyst also estimated that about 60% of Tesla’s future growth would come from the proposed electric vehicle.
According to Benzinga Pro data, Teala closed Monday’s session down 5.59% at $161.48.
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