Tesla Moving Forward with Plans for Entry-Level $25K EV in Mid-2025

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Tesla is reportedly moving forward with its plans to introduce an entry-level electric vehicle (EV) priced at $25,000, codenamed “Redwood,” by mid-2025. This information comes from sources familiar with the matter, with two of them describing the model as a compact crossover.

Tesla CEO Elon Musk has consistently expressed a desire to offer affordable electric vehicles and self-driving robotaxis. The new models, including the anticipated $25,000 car, aim to compete with less expensive gasoline-powered cars and the growing market of affordable electric vehicles, such as those produced by China’s BYD, which surpassed Tesla as the world’s top EV maker in the final quarter of 2023.

Elon Musk initially promised to build a $25,000 car in 2020, a plan that was temporarily shelved and later revived. Currently, Tesla’s most affordable offering is the Model 3 sedan, starting at $38,990 in the United States.

Last year, Tesla sent out “requests for quotes” to suppliers for the “Redwood” model, projecting a weekly production volume of 10,000 vehicles. The sources indicate that production is set to commence in June 2025. Musk’s concerns about the impact of high-interest rates on consumer demand for large purchases like cars have been cited as a factor in the company’s decision-making.

Investors have been eager for information on Tesla’s next-generation compact vehicles, with questions posed ahead of the quarterly results report. Musk previously mentioned that Tesla was working on two new products with the potential for combined sales of 5 million vehicles a year. Plans include the development of an inexpensive robotaxi and the entry-level $25,000 electric car, both based on the same vehicle architecture.

Despite Tesla’s track record of missing launch targets and pricing estimates, Musk expressed confidence in the design and manufacturing techniques of the upcoming products during Tesla’s annual shareholder meeting. The company aims to halve the cost of its next-generation vehicles, though specific launch timeframes were not provided.

Musk mentioned in 2022 that Tesla would introduce a dedicated self-driving taxi with a futuristic design in 2024, following several delays in achieving full self-driving capability. While Tesla has faced challenges in meeting production targets, particularly with the delayed Cybertruck, Musk has stated that the affordable model would initially be produced at Tesla’s factory in Texas.

Attempting to turn a profit from cheaper EVs may prove challenging for Tesla due to battery costs and traditional difficulties in producing quality yet inexpensive vehicles. To address this, Tesla reportedly studied a Honda Civic, priced at $23,950 in the United States, to understand how to manufacture more affordable cars. The next-generation Tesla architecture, internally referred to as “NV9X,” is expected to include two or more models.

Tesla’s global expansion includes plans to build cheaper cars at its factory near Berlin and potential interest in establishing a factory in India for the production of less expensive electric cars. The company already has factories in Shanghai and Fremont, California. Despite potential challenges, Musk remains optimistic about the affordability and quality of Tesla’s upcoming electric vehicles.

Source: Reuters


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