Are we ever going to see the entry-level Model 2?
I guess Elon Musk wanted to get ahead of being corrected by X‘s community notes, so he decided to correct himself. On Friday, Reuters reported that Tesla is axing the entry-level Model 2 in favor of self-driving robotaxis, to which Musk claimed “Reuters is lying (again),” without any specifics. However, only about five hours later, Musk then posted “Tesla Robotaxi unveil on 8/8.” Community notes crisis averted.
In Musk’s defense, his denial of Reuters‘ story could have been referring to the claim that the entry-level Model 2 was being scrapped and that the Robotaxis would instead be sold alongside it. However, the timeline is interesting, as Musk told investors back in January that the Model 2 would begin production in late 2025. If that were to happen, an August 2024 reveal for the Model 2 would make sense. But instead, the August reveal will be for a Robotaxi.
Reuters reportedly laid eyes on internal Tesla documents in which a program manager for the Model 2 seemingly closed the book on the entry-level EV by thanking their team. “I’d like to thank everyone for all your hard work and dedication to pushing boundaries and executing the best design possible given the aggressive constraints we had to work within,” said the manager in the company messages. “We would not want all our hard work to go to waste, so it’s important that we tie things off and document things properly.”
This sounds a lot like a colossal goal post-shift. Given Tesla’s usually glacial production pace, a 2025 release date for the Model 2 seemed overly ambitious. However, switching it to a Robotaxi buys Musk a nearly infinite amount of time with investors and customers alike. Robotaxis aren’t even close to being possible on a large scale and are barely possible on a small scale, as both Waymo and Cruise have recently proven. So shifting gears toward a Robotaxi gives Tesla and Musk a carrot to indefinitely dangle.
With a Robotaxi, Tesla can push the release date back over and over again, as it has with truly full self-driving, and won’t have to actually build anything anytime soon. Semiannual “updates” on its technology, will keep customers and investors on the hook while also providing Tesla with little stock price bumps when needed. After Musk’s Robotaxi announcement, Tesla’s stock jumped 3%, following its 5% dip after Reuter‘s initial story.
A new Tesla Model 3 “Highland” is on display at the China International Import Expo in November 2023. VCG via Getty Images
This also isn’t the first time Musk talked about a fully driverless robotaxi, devoid of a steering wheel and pedals. “It’s fundamentally optimized for trying to achieve the lowest fully considered cost per mile, cost per kilometer, accounting everything,” he told investors in Q1 2022. “I think that that really will be a massive driver of Tesla’s growth.” However, during that same earnings call, he also said he expected volume production by 2024.
Could the entry-level Model 2 have been a Robotaxi all along, which is why Musk denied Reuters‘ report? That’s possible, considering the Model 2 was supposed to start at around $25,000 and Musk already said a Robotaxi would be the most cost-effective vehicle possible. However, it’s also possible that Reuters reported something Elon didn’t want public and decided to put out the media fire by announcing the Robotaxi himself.
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