Reuters published an exclusive story today which says Tesla has decided to abandon plans for its "Model 2" EV and will instead focus on building robotaxis.

Tesla has canceled the long-promised inexpensive car that investors have been counting on to drive its growth into a mass-market automaker, according to three sources familiar with the matter and company messages seen by Reuters.

The automaker will continue developing self-driving robotaxis on the same small-vehicle platform, the sources said...

Two sources said they learned of Tesla's decision to scrap the Model 2 in a meeting attended by scores of employees, with one of them saying the gathering happened in late February.

“Elon’s directive is to go all in on robotaxi,” that person said.

In addition to statements from sources at the company, Reuters has documents which seem to confirm the Model 2 problem is winding down.

In another March 1 message, the manager thanked engineering staffers for their efforts and urged them to document what they had learned.

“I’d like to thank everyone for all your hard work and dedication to pushing boundaries and executing the best design possible given the aggressive constraints we had to work within,” the message said. “We would not want all our hard work to go to waste, so it’s important that we tie things off and document things properly.”

It seems pretty cut and dried but shortly after Reuters published the story, Musk accused them of lying.

Reuters is lying (again)

— Elon Musk (@elonmusk) April 5, 2024

Observers noted that Reuters' story and Elon's response had directly impacted the stock performance today.

You can't make this up:

At 11:05 AM ET, Tesla stock, $TSLA, fell nearly 6% after Reuters reported that the company cancelled plans for a low cost car.

30 minutes later, at 11:35 AM ET, @elonmusk posted that "Reuters is lying (again)."

The stock quickly recovered gaining ~4% in… pic.twitter.com/1K1yEZYOBT

— The Kobeissi Letter (@KobeissiLetter) April 5, 2024

Musk also posted this shot at Reuters:

Reuters is dying https://t.co/yvlXfu9oeI

— Elon Musk (@elonmusk) April 5, 2024

Finally, Musk posted this in response to a tweet about Tesla's plans:

👀

— Elon Musk (@elonmusk) April 5, 2024

The rest of Sawyer Merritt's tweet reads:

However, here is my general thinking. Tesla's low-cost $25k car and the Robotaxi were always going to be based on the same platform. They were going to be very similar, but the $25k version was going to have a steering wheel.

Maybe Elon and the team have been so impressed with how good FSD 12 has performed and were maybe thinking they should be shifting even more resources to the Robotaxi/FSD effort.

This doesn't mean the $25k car is canceled. Again, they share the same platform.

So maybe Reuters is correct that the Model 2 is on the back burner for now but only because Tesla is trying to bring the robotaxi plans forward. The Model 2, or whatever it ends up being called, could still be released later.

Speaking of FSD 12, I mentioned the other day that Tesla had offered a free 30-day trial to owners. I decided to give it a try yesterday. It drove me to lunch and back and later drove my family out for some ice cream. . In some cases the decisions made by the software seemed very human. In one case the car moved into a lane with was right turn only about 100 yards before the street markings made that clear. That was the only moment I had to correct it but otherwise it was a pretty smooth ride. Overall the tech was pretty impressive. It was enough to make me think about those robotaxis being right around the corner even before I saw this story today.

Here's another video showing a bunch of different YouTubers testing recent versions of the software.

Update: Elon just posted this an hour ago.

Tesla Robotaxi unveil on 8/8

— Elon Musk (@elonmusk) April 5, 2024