Tesla has scrapped the long‑rumored Model 2 and is now tinkering with a stripped‑down two‑seat EV aimed at robotaxi fleets. Reuters sources say the new vehicle hasn’t received production approval, leaving CEO Elon Musk as the final gatekeeper. The concept echoes an earlier promise to sell a high‑volume, affordable car, a promise Musk dismissed as “lies” when the Model 2 died in April, and leaves price‑sensitive buyers uneasy.

The robotaxi‑focused model borrows heavily from the Model 3 platform, trading rear seats and interior luxuries for a lighter chassis and lower price tag. Analysts worry the shift signals Tesla’s drift away from consumer cars toward robotics and AI, a narrative Musk has embraced to justify the company’s sky‑high valuation despite slipping global sales and mounting inventory, and could erode brand loyalty.

Bloomberg notes Tesla’s free‑cash‑flow outlook swings from a $6.2 billion surplus at end‑2025 to a $5.8 billion deficit, a $12 billion reversal that underscores the financial strain of chasing new models. History shows each recent launch—Model X, Model 3, Model Y, Cybertruck—suffered design hiccups and production bottlenecks, suggesting the next small EV could face a similarly rocky rollout, and may delay profitability goals.