Four sources acquainted with the topic claim that Tesla has informed suppliers that it plans to begin manufacture of a new mass-market electric vehicle codenamed "Redwood" in mid-2025.
The model was referred to as a compact crossover in two of those sources. Elon Musk, the CEO of Tesla, has long piqued the interest of investors and enthusiasts for low-cost electric cars and self-driving robotaxis, which are anticipated to be produced on more economical platforms for future generations of electric cars.
These models, which would include a $25,000 entry-level vehicle, would enable it to compete with increasingly affordable EVs like those produced by China's BYD as well as less-priced gasoline-powered vehicles. In the last quarter of 2023, it surpassed Tesla as the leading EV manufacturer globally. On Wednesday, Tesla declared that the upcoming car will spark a fresh phase of expansion.
"In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas," Tesla stated in its quarterly report on results. Musk had already declared that he would produce a car for $25,000. He later abandoned and then resurrected this proposal.
The Model 3 sedan, which is currently Tesla's least expensive model, is priced at $38,990 in the US. Musk expressed concern last year about how high borrowing rates would affect consumer demand for expensive goods like vehicles. According to reports, last year, Tesla invited suppliers to submit "requests for quotes," or bids, for the "Redwood" model, with a projected weekly manufacturing capacity of 10,000 cars.
Three reports stated that June 2025 would mark the start of production. Due to the secret nature of the subject, everyone talked on condition of anonymity. One of the most popular questions investors asked Tesla ahead of its quarterly results report on Wednesday afternoon was when the company would release its next generation of compact cars. The company is expected to predict a 21% increase in 2024 deliveries, which is significantly less than the long-term annual target of 50% that Musk set about three years ago.
In May, Musk revealed that Tesla was developing two new products that might together sell five million cars annually. At Tesla's annual shareholder meeting, he declared, "The manufacturing techniques and product design are head and shoulders above anything else that is present in the industry."
Based on the same vehicle architecture, Tesla intends to produce an affordable robotaxi and an entry-level electric car priced at $25,000. This information comes from conversations with the CEO and executives included in Walter Isaacson's biography of Elon Musk, which was published in September. Musk stated in 2022 that, following multiple failures to reach complete self-driving capabilities, Tesla would create a specialized self-driving cab with a futuristic appearance in 2024.
Studying a Honda Civic
Tesla has a history of missing its price and launch targets, and increasing volume would take time. For example, Cybertruck manufacturing has been sluggish to start and has been delayed. Its beginning price in the United States is $60,990, which is 50% more than what Musk claimed in 2019.
They have launched most of their new products with undue optimism. 2026 is more likely to see the start of volume output, according to a source. Musk started last year that Tesla's Texas factory would be the first to produce the entry-level model.
It will be tough to turn a profit on the less expensive EVs considering the expense of batteries and the ongoing challenges in building high-quality, low-cost cars. According to two different accounts, Tesla disassembled a Honda Civic, which retails for $23,950 in the US, to learn how to produce automobiles at a lower cost.
According to the two individuals and one of the first sources, the next-generation Tesla architecture, internally dubbed "NV9X," will comprise two or more models. According to earlier reports, Tesla is interested in establishing a facility in India to create less-priced electric cars, and it also intends to build cheaper automobiles at its manufacturing near Berlin.