Entry-level Tesla Model 2 project scrapped

The long-awaited entry-level Tesla Model 2 EV will not go into production as the American brand seems to have scrapped the project, Reuters reports. The Tesla Model 2 was tipped to come to the market at less than GBP 25,000 (about Rs 26 lakh) as a Volkswagen ID 2, Renault 5 and MG 4 EV rival.

1. Tesla has not yet made an official comment on the report
2. Model 2’s viability based on new production process called Unboxed
3. Tesla scouting for assembly plant location in India

Citing three sources familiar with the matter – and internal company messages – Reuters says the project has been scrapped and the platform that was to underpin the EV will now be used for a line of autonomous robotaxis, produced at much lower volumes.

Tesla refused to comment when approached by our sister publication Autocar UK and Musk responded to the report with a post on his social media platform, X, that simply read: “Reuters is dying”.

Tesla has long hinted at plans for a new car that will sit beneath the Model 3 sedan and Model Y crossover, but it has only given limited indications of its positioning over the past few years. Most recently, the firm released a shadowy teaser image of its silhouette, suggesting it would effectively be a downsized take on the Model 3.The American EV company spoke of ambitious plans to sell an astonishing 700 million examples of the car, codenamed Project Redwood, over its lifetime.

Crucial to the Model 2’s viability was a new production process called Unboxed, which essentially revolves around reducing the amount of work done at each stage of the production line, and avoiding any unnecessary movement or disassembly of the car or its components during its journey down the production line.

For example, the seats would be mounted directly to the underfloor battery pack, with the entire unit then raised into a bodyshell that has been painted in sections to avoid the need for door removal and reinstallation.

Initial production for the Model 2 was tipped for Germany, and the car's platform was thought to be unrelated to other Teslas. Reuters suggests this production process and the platform to which it applies will instead be deployed for Tesla's long-mooted autonomous ride-hailing vehicle, which won't be produced in the same colossal volumes.

Tesla India plans

A few days ago, the Government of India approved a policy to attract investments in the EV space, which states that a company can invest a minimum of Rs 4,150 crore, with no upper limit.

This is an interesting development as Tesla has been lobbying with the government to reduce import duty for years. Although the government had been toying with the idea, it had been facing resistance from Indian and foreign manufacturers operating in India as they have been working on localising their products for years. Tesla, at the moment, is currently scouting for locations for a plant in India.

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