Elon Musk denies report Tesla cancelled $25K car project

Tesla CEO Elon Musk has come out to deny a report that the company has cancelled their next generation vehicle, commonly referred to as the $25K Tesla.

The report came from Reuters early this morning, citing several anonymous sources, claiming that the project had been cancelled, with the company deciding to instead focus on developing a self-driving robotaxi. The publication reported to have seen internal communication discussing the cancellation of the project, known internally as NV91 and externally as H422, with one message reportedly saying, “suppliers should halt all further activities related to H422/NV91,” and another from a manager thanking their employees for their “hard work and dedication” on the project.

Within minutes of the report being published, TSLA share prices dropped more than 5%.

However, not long after the report came out, Musk took to X to refute it, saying “Reuters is lying (again).”

While Musk has denied the report as false, there is some truth to it, but not in the way the Reuters framed it.

Elon Musk had initially wanted to go “all in” on developing the robotaxi, or a vehicle without pedals and a steering wheel, on the next-generation platform. But as revealed in Walter Isaacson’s biography, Chief Designer Franz von Holzhausen and VP Vehicle Engineering Lars Moravy were able to convince Musk to also develop the $25K car on the same platform, with the reasoning being that even if Tesla were to develop a robotaxi, regulatory approval would likely take a long time, and in the interim Tesla could benefit by selling the $25k car to the masses.

While Tesla is still working on both the $25k car and the robotaxi, resources have been shifted off the $25k car project to instead focus on developing the robotaxi, as proposed by enthusiast Sawyer Merritt on X. The apparent reason for the resource shift is FSD v12 and the implementation of end-to-end neural nets, which has shown a lot of promise since its release last month. It appears that with the feedback Tesla is getting and the data they are seeing with the wide release of FSD v12, they believe autonomy is closer than previously thought.

Musk didn’t come out to explicitly validate this as true, but did reply on X with the two eye emoji, suggesting it is accurate.

Since Musk’s denial of the report, TSLA shares have regained some of the initial losses, currently down about 2% in trading.

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