I was at NASA at the time. Not on that project, but some people at my center were. They did some proposal work trying to drum up some funding to make Red Dragon happen. The idea was a split-cost mission, where SpaceX fronts a lot of the R&D money and NASA pays a fixed price to ride along some science equipment on what is essentially a Viking-like Mars lander platform. This would have been not unlike the current Commercial Lunar Payload Services contracts, except for Mars and single-sourced. Do a one-off conversion of a Dragon capsule to land some science experiments on Mars, with SpaceX getting essentially free R&D money out of it because its 90% work they wanted to do anyway.

It got shit-canned for political reasons as it would have shown a commercial capsule to be more capable than Orion, which for a so-called "deep exploration vehicle" was pathetically unable to achieve any of the goals set for the Red Dragon mission. Can't have NASA or Lockheed Martin look bad, that just won't do. SpaceX was at the time trying to win more government launch contracts for the Falcon 9 and a continuation of the commercial resupply and commercial crew contracts which represented a much bigger prize than a one-off Mars science mission.

Rumor is that certain key senators and congress critters that are recipients of large amounts of aerospace lobbying dollars phoned up Elon and NASA Administration and stated in no uncertain terms that if Red Dragon happened then those programs would be zeroed out and SpaceX would never see a dime of government money again. I can't confirm these rumors; I can only say that the project died a very quick death before it even got off the ground, with NASA people working on it reassigned to other projects and not a peep out of Elon on the topic until years later. SpaceX would later decide that the super-drano landing approach wasn't working and go back to the tried-and-true parachutes and water recovery EDL architecture, but that was years after this version of Red Dragon was dead and buried.

ETA: Reading the wikipedia page on Red Dragon made me remember another aspect of the politics which got it cancelled. Most robotic exploration of the solar system is done by JPL, with the other NASA centers just providing scientific instruments or specific component expertise. The actual spacecraft and the whole project management and mission operations is done by JPL though, and they jealously guard that position.

Red Dragon was partially an attempt by NASA Ames management to start a sustained planetary exploration program of their own. They had just come off the phenomenally successful LCROSS mission and were doing a bunch of other small technology demonstration projects to build out the (at the time new) idea of cubesats and ride-shared microsatellites. JPL's view of this was essentially "whatever, enjoy your little toy satellites. lol." Red Dragon as designed in ~2011 may have been larger, but was not fundamentally any different. It was just a big lander to ship a bunch of science instruments that didn't fundamentally differ from what had been already developed for other missions. But as I wrote above, it got shot down through aerospace industry politics. Note the wording on wikipedia: "SpaceX initially planned to propose Red Dragon for funding in 2013 and 2015 as the United States NASA Discovery mission #13 for launch in 2022, but it was not submitted." Who just doesn't submit a proposal? Nobody. Worst they'll do stamp 'rejected' on it, but it doesn't hurt to try. No, it got killed from within.

The 2014 concept was different though: it proposed a single-mission Mars sample return. Now I need to go on a little side story here and tell you about what Mars Sample Return--MSR in JPL speak--means to NASA, and JPL in particular.

The Mars planetary exploration campaign which started in the 90's and culminated in at least one mission at every 26 month launch opportunity, were flagship missions. This means they got the biggest budgets, and NASA did not compete for their design or management. It went straight to JPL. All these planetary probes were built by the usual suspect of aerospace contractors, of course, but the design, engineering work, testing, validation, and mission operations were all done by JPL. Not only is it the pride of JPL, it is also their lifeblood funding. So much of JPL's overhead funding comes from these missions, and the scientists and engineers pull their salaries from them. I worked with a guy that was 0.5 FTE (half-time) doing operations for Spirit & Opportunity, and another 0.5 FTE in an R&D role preparing for the next rover, which would be named Curiosity. These missions were selected based on input from the planetary decadal surveys, but they were scheduled based on what it would take to keep JPL (and other NASA) employees continuously funded at a constant level. That's why the Mars exploration campaign became a sequence of alternating rovers and orbiters at every launch opportunity--a jobs program to keep those amazing scientists and engineers employed.

However conventional wisdom, as reflected in the planetary decadal, said that there is only so far we can go trusting our remote instruments without verifying the data by bringing a sample back to examine in our way more sensitive laboratories on Earth. So the sequence of remotely operated planetary exploration rovers was scheduled to end with the Mars Science Laboratory (AKA Curiosity), and the next big thing would be "Mars Sample Return." Working within self-imposed constraints, the stratospheric architects at JPL put together a mission profile that would require THREE missions back-to-back: one to find and cache samples (this is Perseverance, which just landed on Mars), one to collect those samples and send them to Mars orbit, and one to intercept those samples and bring them home. All built and launched in sequence rather than at the same time, so the total mission duration would be spread over the better part of a decade. Like with SLS, this monstrosity of an architecture was selected because of self-imposed constraints that had nothing really to do with the mission requirements and everything to do with sustaining a JPL jobs program. Three separate missions over the course of a decade is a feature, not a risk factor. Indeed it's the whole point.

Enter SpaceX and the 2014 Red Dragon proposal, which was an all-in-one Mars sample return mission that launched on a single Falcon Heavy and landed a rocket inside of the dragon capsule that was powerful enough to send the collected sample directly back to Earth. Do it all in one mission, and at 10x - 100x reduction in cost. So cheap it didn't even need to be a flagship mission and could be outsourced to industry and academia (like New Horizons was).

JPL was not impressed. Play with your little toy satellites all you want, but don't fuck around with the golden goose. 2014 Red Dragon sample return proposal was a direct threat to the entire Mars planetary exploration program and semi-autonomous JPL's bottom line. They hit back hard trying to discredit the proposal with a bunch of underhanded arguments and agency politics. That's about the time I left NASA so I didn't get to see it fully play out, but apparently JPL won out because in the end the sample-return version of Red Dragon was deselected from funding.

There was apparently a third concept study in 2016 which I don't know the details of, and it was during or after that third experience that Elon finally pulled the plug and reallocated those resources to Starship. Though I guess you might say that the planned first Starship mission to Mars in 2026 (aspirational) is Red Dragon 4, just with significantly larger Starship instead.