Tesla CEO Elon Musk announced plans in 2022 for a next-generation platform that would allow the company to launch electric vehicles smaller than the Model 3 and Model Y, and with lower prices. However, he did not reveal any timing.
Citing four people familiar with the matter, Reuters reported on Wednesday that Tesla has told suppliers it wants to start producing a vehicle based on the next-generation platform in mid-2025. Two of the people described the vehicle, codenamed Redwood, as a compact crossover.
Musk said in 2020 that Tesla’s next-generation platform would allow the company to introduce a vehicle priced starting at $25,000, although it is not clear whether that is the same vehicle mentioned in the Reuters report.
A separate source told Reuters that Tesla developed a Honda Civic several years ago to study how to build affordable vehicles. The compact Honda starts at about $24,000.
The Model 3 is the most affordable Tesla currently on sale, costing almost $40,000 in base form.
Musk has also previously said that Tesla is planning at least two vehicles on its next-generation platform. At Cybertruck’s launch last fall, Musk said production of vehicles based on the next-generation platform would begin at Tesla’s factory near Austin, Texas. A second production location could be a new factory in Mexico, which Tesla announced last year.
Tesla faces stiff competition from rival EV manufacturers, especially in China, where a number of companies are offering electric cars at much lower prices than what Tesla charges. One of those companies is BYD, which overtook Tesla as the world’s largest EV manufacturer in the last quarter of 2023, delivering 526,409 units compared to Tesla’s total of 484,507 units.