If FSD works, one Robotaxi EV retires up to 10 ICE cars,
Optimus would lower the cost of making things in factories, so lowering the cost of EVs, batteries and solar.
I'm still not giving up on the 25k car, partially because I'm sure staff in China have already done some work on it. (and it will not be overly difficult to achieve.) Most probably, it is simply delayed rather than scrapped.
But if the 25k car isn't happening, then Model 3/Y are the entry level Robotaxis, that is fine for the US and many other countries, but even these cars are a bit big for some parts of Europe and Asia.
I also think a 25K Robotaxi is even better than a 35K Robotaxi, but I admit the difference is cost isn't that significant over 10-15 years and the difference in size is probably something most people could live with, as many taxi's are as big as a Model 3, or bigger.
I don't think Elon is giving up on the mission, they talked plenty about energy storage batteries.
Overall it seems that the product roadmap update was an attempt to redefine priorities, and dampen some expectations. It also seems to reflect Elon's high confidence on FSD progress. In that area he seems to have very high conviction, and that is shaping his thinking.
Part of Elon's thinking is, when FSD works, demand for cars to use as Robotaxis will be high, margins will also be high, as most car purchases will include FSD.