Tesla Inc. shares pared a steep drop in intraday trading after Chief Executive Officer Elon Musk denied a report saying the carmaker had called off plans for a less-expensive vehicle.

The stock fell as much as 6.2% on Friday after Reuters said Tesla had canceled the project, citing anonymous sources and company messages it had reviewed. Shares were down 1.3% as of 1 p.m. Friday in New York.

“Reuters is lying,” Musk wrote on X, without offering specifics. In another post, he responded with an eyes emoji to a Tesla investor who speculated that Tesla was shifting more resources toward trying to bring a robotaxi to market.

Musk first teased a $25,000 model during a battery-related event the company staged in September 2020. The CEO said at that time that a series of innovations Tesla was working on gave him confidence the company could make an electric vehicle at that price point within about three years.

Tesla’s failure to deliver the car on time is proving costly. This week, the company reported its first drop in quarterly vehicle deliveries in four years. It’s losing ground in China, where manufacturers led by BYD Co. offer a bevy of newer and cheaper EVs.

Musk’s biographer, Walter Isaacson, wrote in his book published in September that the billionaire had “repeatedly vetoed” plans to make a less-expensive model for two years after Battery Day. Isaacson wrote that Musk believed Tesla’s self-driving efforts would render the $25,000 car unnecessary.

Reuters reported Friday that Musk had issued a directive in late February to go all in on developing a robotaxi. The CEO has repeatedly claimed Tesla is on the verge of bringing a fully self-driving vehicle to market, but has yet to offer features that can safely be used without drivers keeping their eyes on the road and hands on the wheel.

During Tesla’s most recent earnings call, Musk said Tesla was “very far along” with work on its lower-cost vehicle.

“I’m often optimistic regarding time,” he said. “But our current shows that will start production toward the end of 2025.”

Tesla also has talked up a radical change in its manufacturing approach to reduce costs, including at an investor day hosted in March of last year. During the Jan. 24 earnings call, Musk referred to this as “far more advanced than any other automotive manufacturing system in the world by a significant margin.”

Read More: Tesla’s $25,000 Car Requires Breaking 100-Year-Old Factory Habit

Tesla has scheduled its next earnings release for April 23.

© 2024 Bloomberg L.P.

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