Tesla is discussing a new electric compact SUV with suppliers.
Shanghai is expected to lead production if the vehicle reaches manufacturing.
Lower cost targets to rely on smaller battery, single motor and lighter weight.
It appears Tesla is again mulling over the idea of offering an affordable EV, one that the US-based EV builder has been touting for a long time but has yet to deliver. The smaller, lower-cost electric SUV would add a new entry point beneath the Model Y. The source story cites four people familiar with the matter, saying that Tesla has contacted suppliers in recent weeks to discuss component specifications and manufacturing details for an all-new vehicle rather than a derivative of the Model 3 or Model Y.
The program is in its very early stages. Now, it’s unclear whether Tesla has formally approved the vehicle for production, and the company did not respond to requests for information. The absence of confirmation matters because Tesla has previously previewed or developed products that faced long delays or never reached full-scale output. This time, nothing has been previewed or yet developed.
Based on available information, the new SUV would measure about 4.28 metres in length. This makes it shorter than the current Model Y, which Tesla lists at 4.79 meters overall. This smaller footprint gives Tesla a product that would be aimed at dense urban markets and lower-priced EV segments. This matters particularly in China, where competition is intense, and affordability is a major purchasing factor.
Three sources said initial production is planned at Tesla’s Shanghai plant, with one source adding that the company also wants eventual manufacturing in the U.S. and Europe. The timing is still uncertain, but the people said production is unlikely to begin in 2026. This suggests the company is still working through cost, design and plant-planning decisions.
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On the topic of affordability, Tesla wants the vehicle priced well below the Model 3. Tesla’s U.S. website currently lists the Model 3 starting at US$38,630, including destination and order fees. In Canada, the Model Y is the least expensive Tesla at $52,608, also including fees. The EV builder would need to price its new entry-level model at no more than US$30,000 or CDN$40,000. To do so, cost reductions are said to include a smaller battery, a single electric motor, and likely fewer features.
This development is notable because Tesla’s 2024 decision was to abandon a previously expected low-cost EV program and concentrate on robotaxis and robotics. This new model might be part of a strategy in which future vehicles are designed for autonomous use while still allowing a human-driven configuration where regulations or customer demand require it.
Source: Reuters
