Tesla, known for its electric vehicle innovations, has announced plans to begin production of a new consumer electric vehicle, codenamed “Redwood,” and expected to begin production in mid-2025. According to four people familiar with the matter, this model would be a compact crossover, marking an important step in the company’s strategy to offer more affordable and competitive electric vehicles. As exclusively reported by Reuters.
Tesla CEO Elon Musk has long sparked fan and investor interest in affordable electric vehicles and self-driving robo-taxis, expected to be built on more affordable, next-generation electric car platforms. These models, including a $25,000 entry-level car, would allow Tesla to compete with cheaper gas-powered cars and a growing number of affordable EVs, such as those made by Chinese company BYD, which has overtaken Tesla in as the world’s leading EV manufacturer in the last quarter of 2023.
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Musk initially promised to build a $25,000 car in 2020, a project he later shelved before relaunching. Currently, Tesla’s cheapest offering, the Model 3 sedan, has a starting price of 39,990 euros.
Tesla sent “requests for quotations” or tenders for the “Redwood” model to suppliers last year, and planned a weekly production volume of 10,000 vehicles, according to two of the sources. Production would begin in June 2025, according to three of the sources.
Anticipating the next generation of compact vehicles is one of the most common questions investors ask Tesla ahead of its quarterly earnings call, when the company is expected to see deliveries increase 21% in 2024, well below the long-term 50% annual target set by Elon Musk about three years ago.
Musk mentioned in May that Tesla is working on two new products, with the potential for combined sales of 5 million vehicles per year. “The product design and manufacturing techniques are far beyond anything in the industry,” he said at Tesla’s annual shareholder meeting.
Tesla plans to make an affordable robotaxi and a $25,000 entry-level electric car based on the same vehicle architecture, according to Walter Isaacson’s September biography of Musk, which includes interviews with the CEO and executives.
Mr. Musk said in 2022 that Tesla would build a futuristic-looking self-driving taxi by 2024, after several failed attempts to achieve full self-driving.
Tesla executives also outlined plans last March to halve the cost of its next-generation vehicles, but did not provide a timeline for launches.
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In terms of research and development, Tesla recently took apart a Honda Civic to study how to make cheaper cars. Tesla’s next architecture, internally dubbed “NV9X”, will include two or more models. In addition, Tesla plans to build cheaper cars at its Giga Berlin factory and wants to build a factory in India to produce cheaper electric cars. Tesla also has factories in Shanghai and Fremont, California.
This “Redwood” project represents an ambitious step by Tesla towards the democratization of electric vehicles, seeking to make them accessible to a wider audience and marking a significant change in the global automotive industry.