11:58 AM EDT, 04/05/2024 (MT Newswires) -- (Updates with details throughout.)

Tesla (TSLA) has scrapped its plans to offer an inexpensive car, Reuters reported Friday, citing three sources familiar with the matter and company messages seen by the news agency.

The move comes as the electric vehicle maker and other major auto manufacturers face the challenges of waning EV demand growth in the US and Europe, as well as fierce competition from China, according to the report.

Reuters quoted two sources as saying they found out about Tesla's decision to scrap the Model 2 in a meeting attended by employees, while the third source confirmed the plan cancellation.

The company will continue developing self-driving robotaxis on the same small-vehicle platform, Reuters reported, citing the sources.

Tesla did not respond to requests for comment, according to Reuters.

The company didn't immediately respond to MT Newswires' request for comment.

Tesla shares were down 3.5% in recent trading.

(Market Chatter news is derived from conversations with market professionals globally. This information is believed to be from reliable sources but may include rumor and speculation. Accuracy is not guaranteed.)

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