Tesla’s $25K EV Controversy: Did Elon Musk Mislead Investors About the Affordable Model 2?

Last year, Reuters published a report—backed by internal Tesla documents and three company insiders—claiming that CEO Elon Musk had quietly scrapped plans for the highly anticipated $25,000 electric vehicle. Musk immediately denied the claims, accusing Reuters of spreading false information. However, the report ignited internal tension and raised red flags among Tesla insiders.

At the time, several senior Tesla executives were aware that the affordable EV project had indeed been shelved. Musk himself had reportedly informed employees of the shift in focus. This discrepancy between public denial and internal communication suggests that Musk may have intentionally misled the public and investors.

While some shareholders and company insiders dismissed the drama, citing Tesla's history of pivoting strategies in response to market conditions, others expressed serious concerns. Originally, the $25K Tesla—often referred to as the "Model 2"—was intended to sit on an all-new platform designed to significantly reduce manufacturing costs. The vision was to make EVs truly accessible to the mass market and fuel Tesla’s long-term growth.

Instead, the company chose to pursue a different strategy: focusing on self-driving robotaxis. A year later, there’s still no concrete update about the Model 2. With sales slowing and Tesla’s lineup showing signs of age, talk of an affordable EV has resurfaced. But rather than building a new model from the ground up, Tesla now reportedly plans to release stripped-down versions of the Model 3 and Model Y.

Internally, some executives fear another SEC investigation. When the Reuters report first dropped, Tesla's stock fell sharply—only to rebound after Musk's public denial. If no affordable EV is launched soon, the episode could be interpreted as potential market manipulation.

Tensions appear to be brewing behind closed doors, and both investors and company insiders are pushing Musk to revisit the original affordable EV blueprint. Whether the elusive $25K Tesla will ever hit the roads remains uncertain, but the pressure is undeniably building.