In a strategic move to meet the growing demand for an affordable electric vehicle (EV), Tesla is gearing up for mass production of a new model starting in 2025 citing sources familiar with the plans.
The forthcoming model, often referred to as “Redwood,” is envisioned as a compact crossover, aligning with CEO Elon Musk’s longstanding commitment to delivering an affordable car to Tesla enthusiasts. The base model of the compact crossover could potentially carry a price tag as low as $25,000, according to the report.
Initial production targets are ambitious, with plans to manufacture 10,000 cars per week, as revealed in a request for quotes sent by Tesla to auto suppliers, according to the anonymous sources.
This move is seen not only as a response to the persistent demand from Tesla’s fan base for a more budget-friendly option but also as a strategic maneuver to compete with low-cost Chinese EV manufacturers. The affordability factor could bolster Tesla’s position in the market, making it a more attractive option for price-conscious consumers.
While this development is a positive one for Tesla, it poses a challenge to European carmakers. The European auto industry has long struggled to rival Tesla’s dominance in the EV market, and this latest move by the American automaker could further intensify the competition.
Europe’s EV market, however, faced challenges in December, experiencing a decline in sales, particularly in Germany, where a 48% drop was noted. This downturn was attributed to the sudden cessation of EV subsidies by the government. Furthermore, disruptions in global supply chains, triggered by the crisis in the Red Sea, have added complexities to the automotive industry.
Tesla, too, felt the impact of the supply chain issues, leading to a temporary halt in production at its German factory earlier this week. Delays in component deliveries, caused by ship rerouting away from the Red Sea, affected Tesla’s import of battery components from China. The Red Sea and Suez Canal, once the shortest and most reliable route, are now facing challenges that are influencing production schedules.
Elon Musk, who has been pledging an affordable Tesla for the past four years, initially envisioned the Model 3 to fill this role. However, with the starting price close to $39,000, Musk’s commitment to affordability has prompted the development of the new compact crossover model, with production expected to commence in the middle of 2025, according to the sources.
