The reported cancellation came as Tesla faced challenges selling its cars in the U.S. and growing competition in China, the world's largest auto market. The company reported an 8.5% drop in first quarter sales compared to a year earlier, while its chief rival BYD reported a 13% year-over-year increase. Tesla is also facing several lawsuits related to its Autopilot and Full Self-Driving systems, and self-driving cars have only been approved by U.S. regulators for limited use on public roads.
Key takeaways:
- Elon Musk has denied reports that Tesla is scrapping plans for a cheaper new car, sometimes referred to as the Model 2, which was expected to start at about $25,000.
- Tesla's stock dropped almost 6.2% on Friday following the report, but recovered some of its losses. However, it is still down 32% so far this year.
- Instead of making the Model 2, Tesla will reportedly focus on building self-driving robotaxis, despite facing several lawsuits related to its Autopilot and Full Self-Driving systems.
- Tesla is facing growing competition, particularly in China, where its chief rival BYD reported a 13% year-over-year increase in sales, compared to Tesla's 8.5% drop in first quarter sales.