Tesla targets mid-2025 for new electric vehicle launch
Tesla aims to begin production of a new mass-market electric vehicle, codenamed "Redwood," in mid-2025, four sources familiar with the matter revealed. Two of these sources describe the model as a compact crossover.
Tesla CEO Elon Musk has heightened anticipation for affordable electric vehicles and self-driving robotaxis, expected to be built on more cost-effective, next-generation platforms. These models, including a $25,000 entry-level car, would position Tesla to compete with lower-priced gasoline cars and inexpensive electric vehicles, such as those from China's BYD. In the final quarter of 2023, BYD surpassed Tesla as the world's leading EV maker.
Musk initially promised a $25,000 car in 2020, a plan he later shelved and then revived. Tesla's current cheapest model, the Model 3 sedan, starts at $38,990 in the United States.
Last year, Musk expressed concern about the impact of high-interest rates on consumer demand for cars. Tesla sent requests for quotes for the "Redwood" model to suppliers, forecasting a weekly production volume of 10,000 vehicles, two sources said. Production is expected to begin in June 2025, according to three sources, who spoke on condition of anonymity due to the confidentiality of the matter.
Tesla did not respond to a request for comment.
Ahead of Tesla's quarterly results report, investors eagerly anticipated updates on the timing of these next-generation compact vehicles. Tesla is expected to project a 21% increase in 2024 deliveries, falling short of Musk's long-term annual target of 50% growth set three years ago.
In May, Musk announced Tesla's work on two new products with a combined sales potential of 5 million vehicles annually. "Both the design of the products and manufacturing techniques are significantly advanced compared to anything else in the industry," he said at Tesla's annual shareholder meeting.
According to Walter Isaacson's biography of Musk, Tesla plans to produce an inexpensive robotaxi and a $25,000 entry-level electric car using the same vehicle architecture.
In 2022, Musk stated that Tesla would introduce a dedicated self-driving taxi with a futuristic design in 2024, despite previously missed targets for full self-driving capability. Last March, Tesla executives outlined plans to cut the cost of next-generation vehicles by half but did not specify a launch timeline.
To achieve cost-effective production, Tesla has studied the Honda Civic, priced at $23,950 in the U.S., as a model for creating cheaper cars. The forthcoming Tesla architecture, internally named "NV9X," will include two or more models.
Tesla also plans to manufacture more affordable cars at its Berlin factory and is considering a facility in India for lower-cost electric cars. The company already operates factories in Shanghai and Fremont, California.