Tesla is reportedly developing a new, more compact and affordable electric SUV, according to four individuals familiar with the matter. The vehicle will not be a variant of the existing Model 3 or Y, and discussions with suppliers have covered manufacturing processes and component specifications.
Three sources indicated the compact SUV would initially be produced in China, with one suggesting Tesla aims to expand production to the United States and Europe. The vehicle is expected to measure 4.28 metres in length, significantly shorter than the Model Y SUV, which is about 15.7 feet long.
The effort follows a decision by Chief Executive Elon Musk to scrap a low-cost EV project in 2024 and pivot to robotaxis and humanoid robots. A key question is whether this signals a strategy shift back to mass-market human-driven EVs or aligns with Tesla's vision for fully autonomous vehicles. A Tesla employee said the automaker aims to build models that would be driverless but offer a human-driven option, as many global markets won't see meaningful adoption of driverless vehicles for years.
Two sources said Tesla aims to offer the new vehicle at a substantially lower price than its entry-level Model 3 sedan, which starts at $34,000 in China and about $37,000 in the United States. Cost savings would come from using a smaller battery, a single electric motor, and making the car lighter at about 1.5 metric tons compared with roughly two tons for the Model Y. Production is unlikely to begin this year.
Tesla did not respond to requests for comment. The project remains in an early development stage, and it is unclear whether Tesla has given the green light for production. The automaker has a history of delaying or cancelling products, such as the Roadster supercar and Semi freight truck.
