Tesla (TSLA.O) has set its sights on unveiling a new mass-market electric vehicle, codenamed “Redwood,” slated for production commencement in mid-2025, according to sources familiar with the matter. Described by two insiders as a compact crossover, this move aligns with Tesla CEO Elon Musk’s longstanding ambition to introduce affordable electric vehicles and self-driving robotaxis, all based on next-generation, cost-effective electric car platforms.
In a bid to compete with more budget-friendly alternatives, including China’s BYD, which overtook Tesla as the world’s leading EV maker in Q4 2023, Musk had initially promised a $25,000 car in 2020. The current entry-level Model 3 sedan, priced at $38,990 in the United States, falls short of this target.
Tesla sent out “requests for quotes” to suppliers last year, envisioning a weekly production volume of 10,000 vehicles for the “Redwood” model. Production is expected to kick off in June 2025, according to three sources who spoke on condition of anonymity due to the confidential nature of the matter.
Despite not responding to requests for comments, Tesla faces questions from investors regarding the timing of its next-generation compact vehicles, which is expected to be addressed in the quarterly results report on Wednesday. Musk hinted at the potential launch of two new products with a combined sales target of 5 million vehicles annually during Tesla’s annual shareholder meeting in May.
The company’s plan includes the creation of an inexpensive robotaxi and an entry-level $25,000 electric car, both based on the same vehicle architecture. However, Tesla’s history of missing launch targets and price projections, such as the delayed and slow-to-scale Cybertruck production with a starting price 50% higher than initially touted, raises skepticism about meeting ambitious goals.
Musk indicated last year that the affordable model would be initially manufactured at Tesla’s Texas factory. Profitability from cheaper EVs poses a challenge due to battery costs and the inherent difficulties in producing quality yet inexpensive vehicles. Tesla’s study of a Honda Civic, priced at $23,950 in the U.S., reflects its efforts to glean insights into cost-effective car manufacturing.
The next-generation Tesla architecture, internally referred to as “NV9X,” is anticipated to feature two or more models. Furthermore, Tesla’s global expansion plans include building cheaper cars at its Berlin factory and exploring the possibility of establishing a factory in India. Presently, Tesla operates factories in Shanghai and Fremont, California.