Tesla Inc. (NASDAQ:Tesla) shares traded lower on Friday after reports that the electric vehicle maker was selling off its products low cost vehicle program competition in China.
Tesla has begun production of its much-anticipated affordable car, a departure from Chief Executive Elon Musk’s original mission to create electric vehicles for a wider audience, Reuters exclusively reports.
The report adds that the decision dampens Tesla’s hopes of expanding market reach and means a shift in focus towards developing self-driving robo-taxis on the same vehicle platform.
Musk raises questions in latest report, questioning its credibility tweet.
Musk outlined his vision in a 2006 master plan that included using profits from luxury models to fund the development of cost-effective family cars.
Although Musk had previously pledged to launch the affordable model in the second half of 2025, the project was terminated due to rising competition from Chinese electric vehicle (EV) manufacturers, which offer cars at significantly lower prices , some even for as low as $10,000. Reuters wrote.
Changes in autonomous taxi strategies create new engineering and regulatory challenges that could further delay delivery times.
According to Reuters, the project, known internally as NV91 and externally as H422, was canceled at a company meeting attended by dozens of employees and instructed to stop all related activities and record learning results for future reference.
The shift raises doubts about Tesla’s ability to meet Musk’s ambitious goal of selling 20 million vehicles by 2030 and maintain its competitive advantage in the electric vehicle market.
March, Tesla Announce price increase Model Y will be launched in the United States on April 1 and in Europe on March 22. Tesla is offering discounts on Model Y models in China to maintain sales momentum.
After more than a year of steep price cuts, Tesla’s automotive gross profit margin has fallen to well below 20% from a peak of 30% in the fourth quarter of 2021 due to the chip shortage crisis.
exist Season oneTesla’s vehicle deliveries fell year-over-year for the first time since 2020, with 386,810 vehicles delivered compared with 422,875 vehicles last year.
Production also fell to 433,371 units from 440,808 units in the same period last year, and the company did not meet analysts’ expectations.
Tesla said the sales decline was partly due to the early stages of production of the updated Model 3 at the Fremont plant, as well as disruptions caused by the plant’s closure.
The closures were caused by shipping diversions caused by the Red Sea conflict and the Berlin Gigafactory arson attack.
Despite these challenges, Tesla has regained its position as the world’s No. 1 electric car maker by sales.
Tesla shares have fallen more than 36% in the past six months.
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Price Action: Tesla shares were down 3.42% at $165.26 at last check on Friday.
Disclaimer: This content is generated in part with the help of artificial intelligence tools, and is reviewed and published by Benzinga editors.
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This article Tesla reportedly cancels low-cost car plans, Musk denies claims Originally appeared in Benzinga.com
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