Former Tesla CEO says it is a 'shame' company is cancelling low-cost car plans

HONG KONG -- Martin Eberhard, a Tesla founder and former CEO, said on Tuesday it was a "shame" to hear that the automaker was scrapping its low-cost car plans amid fierce competition in China.

Eberhard was speaking at the HSBC Global Investment Summit in Hong Kong. On Friday, Reuters reported that Tesla was cancelling its long-promised inexpensive car that investors had been counting on to drive growth.

The decision represents an abandonment of a longstanding goal that Tesla chief Elon Musk has often characterized as its primary mission: affordable electric cars for the masses.

His first "master plan" for the company in 2006 called for manufacturing luxury models first, then using the profit to finance a "low-cost family car."

"We have both read in the news, Tesla delaying or eliminating their low-end Model 2 program, which is a shame for them, but it's a sign that China has a chance to really spread there," Eberhard said.

Tesla's cheapest current car, the Model 3 sedan, retails for about $39,000 in the U.S. The now-cancelled entry-level vehicle, sometimes described as the Model 2, was expected to start at about $25,000.

Three sources told Reuters that while Tesla had scrapped plans for its inexpensive car, it would continue to develop self-driving robotaxis on the same small-vehicle platform.

Tesla did not immediately respond to a request for comment.