Tesla’s next move: “Redwood,” a mid-2025 compact crossover aiming for affordability at $25,000, challenging the competition in the electric vehicle market after BYD’s global lead in 2023.
Tesla has reportedly informed its suppliers about its intention to commence production of a new mass-market electric vehicle named “Redwood” around mid-2025. Two of these sources describe the upcoming model as a compact crossover to Reuters. Elon Musk, CEO of Tesla, has consistently teased the prospect of affordable electric vehicles and self-driving robotaxis, anticipated to be developed on advanced and cost-effective electric car platforms.
These models, including an entry-level car priced at $25,000, aim to position Tesla competitively against more affordable gasoline-powered cars and the growing market of inexpensive electric vehicles, such as those manufactured by China’s BYD.
Notably, BYD surpassed Tesla as the world’s leading electric vehicle manufacturer in the final quarter of 2023. Musk had initially pledged to introduce a $25,000 car in 2020, a plan that was subsequently put on hold and later revived. As of now, Tesla’s most economical offering, the Model 3 sedan, starts at $38,990 in the United States. Last year, Musk expressed concerns about the potential impact of high-interest rates on consumer demand for significant purchases like cars.
Tesla initiated the procurement process for the “Redwood” model by sending out “requests for quotes” to suppliers last year, envisioning a weekly production volume of 10,000 vehicles, according to two of the sources. Production is anticipated to commence in June 2025, as disclosed by three sources, all of whom spoke on the condition of anonymity due to the confidential nature of the matter. Tesla has not provided any official comments on the subject.
The timing of the release of next-generation compact vehicles was a highly anticipated question from investors leading up to Tesla’s quarterly results report, where it is expected to project a 21% increase in deliveries for 2024, falling short of Musk’s long-term annual target of 50% set about three years ago.
In May, Musk stated that Tesla was actively working on two new products with the potential for combined sales of 5 million vehicles annually. He emphasized these products’ superior design and manufacturing techniques compared to industry standards. According to Walter Isaacson’s biography of Musk, released in September, Tesla plans to manufacture an affordable robotaxi and an entry-level $25,000 electric car based on the same vehicle architecture.
Despite Tesla’s track record of missing launch targets and price projections, Musk has expressed confidence in these upcoming models. The company has faced delays and slow acceleration in the production of the Cybertruck, with a starting price 50% higher than initially touted in 2019.
To gain insights into producing more affordable vehicles, Tesla reportedly disassembled a Honda Civic, with a starting price of $23,950 in the United States. According to sources, the next-generation Tesla architecture, internally referred to as “NV9X,” is expected to encompass two or more models. In addition to the Texas factory, Tesla aims to build cheaper cars at its Berlin facility and has shown interest in establishing a factory in India for the production of more affordable electric vehicles. Tesla currently operates factories in Shanghai and Fremont, California.
