Tesla has told suppliers it wants to begin production of a new mass market electric vehicle codenamed “Redwood” in mid-2025, according to four people familiar with the matter, two of whom have described the model as a compact crossover. Has been described.
Tesla CEO Elon Musk confirmed on a post-earnings call Wednesday that the company expects to begin production of next-generation EVs at its Texas factory in the second half of 2025.
A decision on another factory in Mexico and outside North America will then be made later this year, he said, adding that scaling up production of the new vehicle will be challenging.
Musk has long fueled fan and investor interest in affordable electric vehicles and self-driving robotaxis, which are expected to be built on next-generation, cheaper electric car platforms.
Those models, including an entry-level $25,000 car, will allow it to compete with cheaper gasoline-powered cars and a growing number of affordable EVs made by China’s BYD.
BYD overtook Tesla to become the world’s top EV maker in the last quarter of 2023.
Tesla said on Wednesday that the next generation vehicle will drive a new wave of development.
“In 2024, our vehicle volume growth rate may be significantly lower than the growth rate achieved in 2023 as our teams work on next-generation vehicle launches at Gigafactory Texas,” Tesla said in the quarterly results report.
Musk first promised to build a $25,000 car in 2020, but later scrapped and then revived the plan. Tesla’s most affordable offering, the Model 3 sedan, currently has a starting price of $38,990 in the United States.
Musk said last year that he was concerned about the impact of higher interest rates on consumer demand for big-ticket items like cars.
Two sources said Tesla sent out a “request for quotations” or invitation for bids for the “Redwood” model to suppliers last year and estimated a weekly production volume of 10,000 vehicles.
Three sources said production would begin in June 2025. All spoke on condition of anonymity because the matter is confidential.
The timing of next-generation compact vehicles was one of the most-voted questions by investors ahead of Tesla’s quarterly results report on Wednesday afternoon, where 2024 deliveries are projected to increase 21% from the long-term annual target. It is quite less. Of the 50% that Musk had set about three years ago.
Musk said in May that Tesla was working on two new products with the potential for combined sales of 5 million vehicles per year. “Both the design of the products and the manufacturing technology are head and shoulders above anything else that exists in the industry,” he said at Tesla’s annual shareholder meeting.
Tesla plans to build an affordable robotaxi and an entry-level, $25,000 electric car based on the same vehicle architecture, according to Walter Isaacson’s biography of Musk released in September, which includes interviews with the CEO and executives .
Musk said in 2022 that after several misses in its goal of achieving full self-driving capability, Tesla would create a dedicated self-driving taxi with a futuristic look in 2024.
He and other Tesla executives last March outlined plans to halve the cost of next-generation vehicles, but did not give a timeframe for the launch.
Honda Civic Study
Tesla has a track record of meeting its launch and pricing targets, and it will take time to increase volume.
For example, production of the Cybertruck has been delayed and slowed down, and its starting price of $60,990 US is 50% more than the price stated by Musk in 2019.
“They have been overly optimistic on most of their new product launches. Volume output is more likely to start in 2026,” said one of the sources.
Musk said Wednesday, “I’m often optimistic about timing. But our current schedule shows we’ll start production by the end of 2025” and “we’ll be practically sleeping on the line.”
Given battery costs as well as the traditional difficulties in making quality cheap vehicles, turning a profit from cheap EVs will be challenging.
Two separate sources said Tesla in recent years snapped up the Honda Civic to study making cheaper cars, which start at $23,950 in the United States.
The next-generation Tesla architecture, internally called “NV9X,” will include two or more models, two of the people and one of the initial sources said.
Sources had earlier said that Tesla also plans to make affordable cars at its factory near Berlin, and is interested in building a factory in India to produce less expensive electric cars.
The EV maker also has factories in Shanghai and Fremont, California.
