Tesla has informed suppliers that it intends to begin manufacturing a new mass-market electric car dubbed “Redwood” in mid-2025, according to four people familiar with the topic, two of whom describe the model as a small crossover.

Tesla CEO Elon Musk has long piqued fans’ and investors’ interest in affordable electric vehicles and self-driving robotaxis, which are likely to be built on next-generation, less expensive electric car platforms.

These models, including an entry-level $25,000 automobile, would enable it to compete with less-priced gasoline-powered vehicles and an increasing number of low-cost EVs, such as those manufactured by China’s BYD.

BYD overtook Tesla as the world’s leading EV manufacturer in the fourth quarter of 2023.

Musk had previously pledged to construct a $25,000 automobile in 2020, which he then abandoned and then revived. The Model 3 sedan, Tesla’s most affordable vehicle, presently starts at $38,990 in the United States.

Last year, Musk expressed worry about the impact of high borrowing rates on customer demand for large-ticket products such as vehicles.

Last year, Tesla submitted “requests for quotes,” or invitations for bids, to suppliers for the “Redwood” model, with a weekly production volume expectation of 10,000 vehicles, according to two individuals.

Three sources claimed production would begin in June 2025. Everyone talked on the condition of anonymity since the subject was private.

Tesla did not return a request for comment.

One of the most popular questions from investors to Tesla ahead of its quarterly results report on Wednesday afternoon was the timing of next-generation compact vehicle deliveries, which are expected to rise by 21% in 2024, well below Musk’s long-term annual target of 50% set three years ago.

Musk announced in May that Tesla was developing two new products with a combined sales potential of 5 million automobiles per year. “Both the design of the products and the manufacturing techniques are head and shoulders above anything else that is present in the industry,” he stated during Tesla’s annual shareholder meeting.

According to Walter Isaacson’s biography of Musk, which was released in September and contains interviews with the CEO and executives, Tesla intends to build an affordable robotaxi as well as an entry-level, $25,000 electric car using the same vehicle design.

Musk stated in 2022 that Tesla will create a specialized self-driving cab with a futuristic design by 2024, following multiple missed deadlines for reaching complete self-driving capabilities.

Last March, he and other Tesla officials announced ambitions to slash the cost of the company’s next-generation vehicles in half, but no timetable for their introduction was provided.

STUDYING A Honda Civic

Tesla has a history of missing launch and pricing objectives, and increasing volume will take time.

Cybertruck manufacturing, for example, has been delayed and sluggish to accelerate, with a starting price of $60,990 in the United States, which is 50% more than Elon Musk predicted in 2019.

“They’ve been excessively enthusiastic about most of their new product releases.” According to one of the sources, “volume output will most likely begin in 2026.”

Musk stated last year that the inexpensive model will be constructed at Tesla’s facility in Texas.

Profiting from cheaper EVs will be tough due to battery prices and conventional issues in creating excellent low-cost automobiles.

In recent years, Tesla tore down a Honda Civic, which begins at $23,950 in the United States, to research how to produce cheaper vehicles, according to two different sources.

The next-generation Tesla design, internally dubbed “NV9X,” would feature two or more models, according to two persons and one of the first sources.

Tesla also intends to make cheaper cars at its facility in Berlin, and it is interested in establishing a factory in India to produce less-priced electric vehicles, sources previously stated.

The EV manufacturer also has plants in Shanghai and Fremont, California.