Tesla promises 'more affordable' cars after shelving all-new Model 2

Tesla said it would introduce "new models" by early 2025 using its current platforms and production lines as it retreated from more ambitious plans to produce an all-new model that had been expected to cost $25,000.

The talk of new offerings on a faster timeline sent Tesla shares soaring in after-hours trading, a much-needed boost, after months of decline during which Tesla has struggled with fierce competition and falling sales. The gains came despite Tesla releasing first-quarter results that missed Wall Street expectations.

Chief Executive Elon Musk declined to provide details of the new vehicles but said they would include more-affordable models that would start production by early 2025. That's just before the target Musk previously set for launching the all-new low-cost model widely known as the Model 2.

Reuters exclusively reported on April 5 that Tesla had scrapped plans for the Model 2, which investors had expected to drive Tesla's growth into a mass-market automaker. Musk initially reacted to that story with a post on his social platform X saying "Reuters is lying," without pointing out any inaccuracies.

On Tuesday, neither Tesla nor Musk directly addressed the Reuters report.

Instead, they discussed unidentified new models that appeared to be different products, without saying how many, what type or providing their target prices.

The new models would be built on Tesla's current manufacturing lines and use "aspects" of its current platform and a next-generation platform, Tesla said. It cautioned that this plan may "result in achieving less cost reduction than previously expected," suggesting that the vehicles may cost consumers more than the Model 2's anticipated $25,000 price.

The automaker said its plan for new models would let it better control capital expenditures during "uncertain times."

Tesla engineering chief Lars Moravy said the company would avoid the risk of investing in a "revolutionary" manufacturing process. Musk has said previously the all-new affordable car would be a test bed for manufacturing innovation.

Moravy said Tesla's work on the next-generation affordable car is "transferable" to the vehicles the automaker now aims to release early next year.

"That engineering work, we're not trying to just throw it away," Moravy said. "We're going to take it and utilize it."

Musk declined to answer an analyst's question about whether the new vehicles would be all-new models, or tweaks to existing vehicles.

"I think we've said all we will on that front," Musk said.

One observer took Tesla's comments on new models as a confirmation that it had halted plans for the Model 2.

"It seems clear that the new vehicle platform has indeed been shelved for now," said Sam Abuelsamid, an analyst at Guidehouse Insights. "The next gen vehicle was supposed to use fundamentally different production processes from current models. With no desire to spend billions on new production facilities or retool existing factories, it seems like we will see Tesla continue to build the current products."

Currently, Tesla's Model 3 and Model Y, with starting prices of around $40,000, are its only volume sellers.