Tesla's stock experienced a significant drop of up to 6%, translating to a loss of approximately $32 billion, following a report released by Reuters. The report claimed that Tesla is abandoning its long-standing plan to produce an affordable electric car, leading investors to reevaluate the company's prospects. Tesla CEO Elon Musk quickly refuted the claims on social media platform X, but the stock remained down by 3.5% at press time, resulting in a loss of around $19 billion.

According to the Reuters report, three anonymous insiders and internal company messages indicated that Tesla has decided to prioritize the development of robo-taxis instead of pursuing plans for a $25,000 electric vehicle. Musk had previously stated in January that Tesla would commence production of the affordable electric vehicle at its Texas plant by late 2025.

This news emerges shortly after Tesla reported its first year-over-year decline in vehicle deliveries since the onset of the pandemic. The company attributed the lackluster numbers to external factors, but some prominent Tesla investors have placed responsibility on Musk as CEO. The stock has dropped by approximately 33% since the beginning of the year, and concerns regarding Tesla's future have led some analysts to predict possible bankruptcy.

Tesla faces mounting competition from Chinese electric vehicle manufacturers who are increasingly penetrating foreign markets. Additionally, the overall market for electric vehicles has experienced a slowdown, with sales growing by just 2.7% in the first quarter, a stark contrast to the 47% growth witnessed in the same period in the previous year. Some analysts suggest that the eco-conscious market for electric vehicles has reached saturation and that manufacturers must now convince traditional gas-powered vehicle owners to make the switch.

Notably, established car companies have also adjusted their electric vehicle production plans. Ford recently announced a delay in the launch of two high-end EVs, focusing instead on plug-in hybrid vehicles, which are perceived to be more cost-effective.

Musk had previously cautioned investors that sales growth in 2024 would be notably slower due to the two growth waves Tesla was navigating: the global expansion of Models 3 and Y, and the introduction of a more affordable vehicle. With the uncertainty surrounding the fate of the affordable electric vehicle, the company's future sales and competitive position remain unclear.

Investors and industry observers will closely watch how Tesla navigates this challenging environment and adapts its strategy to the evolving market dynamics.