Did Elon Musk Cancel New Low-Cost Tesla Vehicle?

Tesla is pushing their driverless taxi service but may have cancelled their Model 2 plans, according to some reports.

Written by: Timothy St. John • Monday, June 2, 2025 • 2 min read

The driverless taxi service that Tesla is working on could be big for them.

Quick overview

Elon Musk has denied reports of canceling a low-priced Tesla car, despite conflicting information from company sources.
Tesla's stock has dipped 0.22% today, following uncertainty about the future of the Model 2 vehicle.
The company appears to be shifting its focus to its upcoming robotaxi service, which is set to launch in select Texas cities.
With no updates on the Model 2 for over a year, investors are left hoping the robotaxi initiative will be successful.

Elon Musk might have killed off a low-priced Tesla (TSLA) car, but the reports on whether he did or not are confusing. Meanwhile, Tesla stock is dipping 0.22% today.

Did Musk kill off plans for a lower cost Tesla car?

Elon Musk posted on social media that he did not cancel a new EV launch, denying a Reuters report that he had. His executives reached out to him on the matter, since sources say they were told the project was cancelled. The project was supposed to be Tesla’s first new vehicle in a while and should have propelled the stock value much higher with its launch.

Instead, it looks like Tesla has pivoted to focus solely on its robotaxi service, which is soft launching soon in a few cities in Texas.

The new vehicle, called the Model 2, was referred to in several company documents and has been mentioned to Reuters by sources within the company, and yet Musk denied ever having cancelled the project that now appears to be cancelled.

Musk previously said about the vehicle that it would be important to the company’s plans moving forward, but there has been no update on the project in a year.

Musk Changes Plans

Musk has been working as a special advisor for U.S. President Donald Trump for the last few months, and he has since stepped away from that role as the head of DOGE (Department of Government Efficiency). This move should have helped Tesla stock climb quickly, but Tesla stock has been on a slight decline for the past few days.

We did see Tesla’s stock price jump in early May, climbing from $276 to $347 in a few days. This was mostly the result of improved trade relations between the United States and other countries as Trump put the pause on many of his proposed tariffs. Tesla has held on to much of those gains and is now down to just $338 per share.

With no update on the Model 2 in a while, and with Tesla focusing on its robotaxi division, we may not see a new model from Tesla for a while. The investors will have to hope that the robotaxi venture really pays off for the company.

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ABOUT THE AUTHOR See More

Timothy St. John

Financial Writer - European & US Desks

Timothy St John is a seasoned financial analyst and writer, catering to the dynamic landscapes of the US and European markets. Boasting over a decade of extensive freelance writing experience, he has made significant contributions to reputable platforms such as Yahoo!Finance, business.com: Expert Business Advice, Tips, and Resources - Business.com, and numerous others. Timothy's expertise lies in in-depth research and comprehensive coverage of stock and cryptocurrency movements, coupled with a keen understanding of the economic factors influencing currency dynamics. Timothy majored in English at East Tennessee State University, and you can find him on LinkedIn.