Tesla has informed its suppliers about its intention to commence production of a new affordable electric vehicle called "Redwood" around mid-2025, as reported by four individuals familiar with the matter. Among them, two sources described the model as a compact crossover.
CEO Elon Musk of Tesla has long generated excitement among fans and investors for affordable electric vehicles and self-driving robotaxis. These vehicles are anticipated to be built on next-generation, more cost-effective electric car platforms. Models like an entry-level $25,000 car aim to compete with less expensive gasoline-powered cars and the increasing number of budget-friendly electric vehicles, including those produced by China's BYD.
In 2020, Musk initially pledged to build a $25,000 car, a plan he temporarily put on hold but later revived. Currently, Tesla's most affordable offering is the Model 3 sedan, starting at $38,990 in the U.S. Last year, Musk expressed concerns about the impact of high-interest rates on consumer demand for major purchases like cars.
Tesla reached out to suppliers last year with "requests for quotes" for the "Redwood" model, forecasting a weekly production volume of 10,000 vehicles, according to two sources. Production is anticipated to commence in June 2025, as per three sources who spoke on condition of anonymity due to the confidential nature of the matter. Tesla has not provided a response to requests for comment.
The timing of next-generation compact vehicles was a top inquiry from investors ahead of Tesla's quarterly results report. The company is expected to forecast a 21 percent increase in 2024 deliveries, falling short of Musk's earlier target of 50 percent annual growth set approximately three years ago.
Musk announced in May that Tesla was actively working on two new products, with the potential for combined sales of 5 million vehicles annually. The company aims to produce an affordable robotaxi and an entry-level $25,000 electric car sharing the same vehicle architecture, according to Walter Isaacson's biography of Musk released in September.
In 2022, Musk indicated that Tesla plans to introduce a dedicated self-driving taxi with a futuristic look in 2024, following previous setbacks in achieving full self-driving capability. Last March, Musk and other Tesla executives outlined plans to reduce the cost of its next-generation vehicles by half, although no specific timeframe for the launches was provided.