Tesla Nears 52-Week Lows as It Scraps Plans for a Cheaper EV Amid Fierce Chinese Competition [Update: Elon Musk Says Reuters is Lying]

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Tesla (NASDAQ: TSLA) seems to have surrendered in front of a veritable onslaught of competition from China, eviscerating a major plank of its medium-term bullish thesis. Now, the EV giant's FSD capabilities and the attendant licensing deals, as well as the lucrative cash stream from the still-non-existent robotaxis, might be the only salvation on the proverbial horizon.

We reported in January that Tesla was working to launch an entry-level $25,000 EV, dubbed "Redwood" internally and widely known as the Model 2, by June 2025, with the EV giant going so far as to send requests for price quotes to certain suppliers of key components based on a volume production level of 10,000 units per week, equating to around 520,000 units per year.

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Redwood was to be an affordable compact crossover, with Tesla engineers expending quite a lot of effort to unlock economies of scale, including tearing down a "Honda Civic to study how to make cheap cars," as per a Reuters report.

Now, however, Reuters has come up with a scoop that Tesla has scrapped its plans for a $25,000 EV, instead choosing to try to develop robotaxis on Redwood's platform. This means that the Model 3, which starts at around $39,000 in the US, will remain Tesla's cheapest model for the foreseeable future.

We noted earlier this week that Tesla has now recorded its first quarter with negative year-over-year growth in deliveries since the apex of the pandemic-induced mayhem in Q2 2020.

With price cuts no longer working to stave off a precipitous plunge in demand, Tesla is now offering to buy back its vehicles in China at 45 percent of the invoice price in three years to support resale values. Moreover,