Tesla plans to build affordable electric vehicles
Tesla has informed its suppliers of its intention to commence the production of a new affordable electric vehicle (EV), internally referred to as “Redwood“, around mid-2025.
Sources familiar with the matter reveal that two of them specifically characterize the upcoming model as a compact crossover. According to three of the sources, production is slated to commence in June 2025. All sources requested anonymity due to the confidential nature of the matter.
Tesla issued “requests for quotes” or invitations for bids to suppliers for the “Redwood” model, outlining a projected weekly production volume of 10,000 vehicles, as indicated by two of the sources.
The timing of the release of the next-generation compact vehicles emerged as one of the top-voted questions from investors leading up to Tesla’s quarterly results report on Wednesday afternoon.
The report is anticipated to include a projection of a 21% increase in deliveries for 2024, falling notably short of the ambitious long-term annual target of 50% set by Elon Musk, CEO of Tesla, approximately three years ago.
Musk, has consistently stirred excitement among fans and investors by teasing the prospect of affordable electric vehicles and self-driving robotaxis. These innovations are anticipated to be built on upcoming, more cost-effective electric car platforms.
Introducing models like the entry-level $25,000 car positions Tesla to compete effectively with more affordable gasoline-powered vehicles and the expanding market of budget-friendly electric vehicles, exemplified by China’s BYD. BYD surpassed Tesla as the world’s leading electric vehicle manufacturer in the last quarter of 2023.
Musk had first promised to build a $25,000 car in 2020, a plan he later shelved and then revived. Tesla’s cheapest offering, the Model 3 sedan, currently has a starting price of $38,990 in the United States.
Musk said in May that Tesla was working on two new products, with the potential for combined sales of 5 million vehicles a year.
“Both the design of the products and manufacturing techniques are head and shoulders above anything else that is present in the industry,” he said at Tesla’s annual shareholder meeting.
Also Read: Tesla Falls Short of 2023 Electric Vehicles Supply Target
Tesla plans to make an inexpensive robotaxi and an entry-level, $25,000 electric car based on the same vehicle architecture, according to Walter Isaacson’s biography of Musk released in September, which includes interviews with the CEO and executives.
Musk said in 2022 that Tesla would make a dedicated self-driving taxi with a futuristic look in 2024, after several misses at its goal of achieving full self-driving capability.
He and other Tesla executives laid out plans last March to halve the cost of its next-generation vehicles but did not provide a timeframe for the launches.
Tesla has a track record of missing its targets for launches and pricing, and it would take time to build volume. Musk said last year the affordable model would initially be built at Tesla’s factory in Texas.
Profiting from affordable EVs poses challenges due to battery costs and the traditional difficulty of producing high-quality, inexpensive vehicles. Tesla has recently dismantled a Honda Civic, priced at $23,950 in the United States, to gain insights into creating more cost-effective cars, according to two sources.
The upcoming Tesla architecture, internally designated as “NV9X,” is expected to incorporate two or more models, according to both individuals and one of the sources.
Additionally, Tesla intends to manufacture more cost-effective vehicles at its Berlin factory and has expressed interest in establishing a factory in India dedicated to the production of affordable electric cars, according to previous sources.
