Tesla Model Y 2022 review

Tesla plans affordable all-new car for 2025

Compact crossover designed to compete with cheap rivals from China

Insiders at Tesla are reported to have revealed that the American electric vehicle (EV) company is planning an affordable new model that is due to launch in 2025.

Anonymous sources from within Tesla said that the car, with the codename “Redwood”, is due to begin production in the middle of 2025, with a targeted on-sale price in its homeland of $25,000 (£19,618).

This would compare with its current cheapest vehicle, the Model 3, which starts from US$38,990 in the US and £39,990 in the UK — raising the intriguing possibility that we could have a Tesla priced from around £25,000, if the company decides to sell it in the UK.

New platform makes small EV possible

News agency Reuters reported that four people came forward with the confidential information and declined to give their names. Tesla has made no official comment on the Redwood rumours.

However, CEO Elon Musk has stated previously and repeatedly that he wants his company to make more affordable EVs, including self-driving robotaxis.

To do that, Tesla will need to make next-generation, cheaper EV underpinnings on which they can sit. The current “platform” used for the Model 3 and Model Y preclude making vehicles any smaller at present.

Tesla Model Y goes on sale in UK, priced from £54,990

Redwood was described by the Tesla insiders as a compact crossover, which is the most popular sector of the global automotive marketplace and will include forthcoming electric versions of the Ford Puma and Nissan Juke, as well as the new Volvo EX30 EV.

Competing with China

The hope is that the new, more affordable Tesla would be able to compete with the most inexpensive petrol- and diesel-powered cars, as well as other low-cost EVs coming from China.

The information leak follows the news that Chinese company Build Your Dreams, otherwise known as BYD, overtook Tesla to become the world’s top EV manufacturer in the final quarter of 2023.

Musk promised a cheap EV in 2020, although caution must be exercised in taking his base price figure at face value — in 2019, he said the Cybertruck would launch with a starting figure of US$40,000 but it eventually went on sale late last year from US$60,990, 50 per cent more than initially proposed.

Tesla Cybertruck

Tesla’s CEO said another reason for making a cheaper EV is that rising interest rates could have an effect on consumer demand for more expensive items, such as cars.

According to the sources, Tesla sent out “requests for quotes”, or invitations for bids, for the Redwood proposal last year.

The planned weekly production volumes are said to be in the order of 10,000 vehicles, with the line starting in the middle of next year.

However, using the delays on the long-awaited Cybertruck as evidence, one of the sources told Reuters: “They have been overly optimistic on most of their new product launches. Volume output is more likely to begin in 2026.”

New lines targeting 5m vehicle sales annually

In May 2023 Musk himself said that Tesla was working on two new products, with a combined sales target of five million vehicles per year. He told the annual shareholder meeting: “Both the design of the products and manufacturing techniques are head and shoulders above anything else that is present in the industry.”

The leak of the Redwood information looks like suspiciously good timing on the part of Tesla.

Ahead of its quarterly results report due out today [24 Jan], the timing of next-generation compact vehicles was one of the most voted questions from investors.

Tesla is expected to forecast a 21 per cent rise in 2024 deliveries in the report, although this is some way shy of Musk’s 50 per cent year-on-year growth plan that he set out three years ago.

The CEO also claimed in 2022 that Tesla would be making a self-driving, futuristic-looking taxi by 2024, while he and other executives at the company laid out plans in March 2023 which said the cost of its next-generation vehicles would be halved.

Production location yet to be set in stone

Making the Redwood EV at the targeted prices won’t be straightforward. The cost of lithium-ion batteries for electric cars still remains high, while there are also the long-standing issues in making affordable products to a high enough quality demanded of the company.

To that end, it is not immediately clear where the Redwood model, and indeed any other subsequent cars based on the platform known as “NV9X” internally at Tesla, would be built.

Musk said in 2023 that its cheapest EV would be built at the company’s factory in Texas.

However, Tesla also plans to build affordable cars at one of its facilities near Berlin, while it is further looking into the possibility of opening a production site in India to make less expensive EVs. The company also has factories in Shanghai, China, and Fremont, California.

Tesla has be approached for comment.

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