According to multiple reports, Tesla is developing an entirely new, more compact and affordable electric SUV, with four individuals familiar with the matter indicating the project is in an early stage. The company has recently contacted suppliers to discuss plans for this model, which will not be a variant of the existing Model 3 or Y, covering manufacturing processes and component specifications. The vehicle is expected to measure 4.28 metres in length, making it significantly shorter than Tesla’s Model Y SUV, and two sources said Tesla aims to offer it at a substantially lower price than its entry-level Model 3 sedan, which starts at $34,000 in China and about $37,000 in the United States. Reuters could not determine whether Tesla has given the green light for the car’s production.
Manufacturing plans for the compact SUV include initial production in China, as indicated by three sources, with one source suggesting Tesla aims to expand production to the United States and Europe.
This development occurs against a strategic backdrop where Chief Executive Elon Musk decided to scrap a highly anticipated low-cost EV project in 2024 and pivot the company to focus on robotaxis and humanoid robots. Tesla now aims to build models that would be driverless but offer a human-driven option, as the company realizes many global markets won’t see meaningful adoption or regulatory acceptance of driverless vehicles for years. Preserving the option to build a particular model with or without driving controls could enable more sales and help ensure Tesla can keep its car factories running near capacity. Some analysts predict a third-straight year of declining sales for the traditional EVs that provide the vast majority of Tesla's revenue, while Tesla operates a small number of robotaxis only in Austin, Texas, many with human safety monitors in the passenger seat.
Tesla did not respond to requests for comment about plans for a new vehicle, and a Tesla employee declined to confirm or deny details of any specific vehicle. The company has a history of starting development on products that end up long delayed or canceled, such as the Roadster supercar and Semi freight truck shown in 2017 but not yet mass-produced.