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Tesla planning to produce new-generation cheap compact EV in mid-2025

Tesla planning to produce new-generation cheap compact EV in mid-2025 Tesla car models (Getty Images)

Tesla is planning to make a new affordable electric compact car called Redwood and start producing it around June 2025, Reuters reports citing sources.

According to the media, the CEO, Elon Musk, has been long talking about "affordable electric vehicles and self-driving robotaxis that are expected to be made on next-generation, cheaper electric car platforms."

This move would make Tesla compete with less expensive gas cars and other affordable electric cars, like those made by China's BYD (Build Your Dreams company). BYD became the top electric vehicle maker in the world in the last quarter of 2023, surpassing Tesla. So, Tesla's intentions to produce more affordable EVs are also driven by an ambitious goal to return the crown.

Tesla planning to produce new-generation cheap compact EV in mid-2025Tesla (Getty Images)

The company has already contacted suppliers about the Redwood model. "Tesla sent "requests for quotes," or invitations for bids for the "Redwood" model," Reuters says.

It plans to produce around 10,000 vehicles per week starting in June 2025. However, the exact details are kept confidential, and Tesla has not commented on it. Investors and buyers are extremely curious about Tesla's next-generation compact vehicles.

What price is considered

Currently, Tesla's cheapest car, the Model 3 sedan, starts at $38,990 in the United States. Elon Musk initially promised a $25,000 car in 2020 but the plans were changed.

Musk also mentioned working on two new products that could potentially sell 5 million vehicles a year. These products include an inexpensive robotaxi and a $25,000 electric car, both based on the same vehicle architecture.

While Tesla aims to reduce the cost of its next-generation vehicles, historical patterns suggest the company might face challenges in meeting its targets and pricing. The production of the Cybertruck, Tesla's electric pickup, has been delayed, and its starting price is higher than initially promised.

Tesla planning to produce new-generation cheap compact EV in mid-2025

Tesla Cybertruck (Getty Images)

Currently, Tesla is studying other cars, like the Honda Civic, to figure out how to make cheaper cars. The next-generation Tesla architecture, referred to as NV9X, is expected to include multiple models.

Tesla plans to produce new affordable car models not only in Texas but also near Berlin and is exploring the possibility of building a factory in India.

Tesla company

It is an American multinational automotive company headquartered in Austin, Texas, which specializes mostly in designing, manufacturing, and selling electric vehicles. It is one of the world's most valuable companies. The CEO, Elon Musk, tops the list of the richest people in the world.