Tesla is set to construct a new $25,000 EV model by mid-2025

  • Tesla intends to begin producing a small crossover vehicle around 2025, starting at $25,000.
  • China’s BYD overtook Tesla as the largest EV manufacturer in the world during the fourth quarter last year.
  • In an effort to examine ways to reduce costs, Tesla is learning from other manufacturers such as Honda.

Tesla intends to release the new mass-market electric vehicle, code-named “Redwood”, in the middle of 2025, aiming to make it the most affordable EV on the market. The vehicle was described as a compact crossover by the source.

Anticipating a weekly output of 10,000 compact crossovers starting production in June 2025, the Elon Musk-owned company submitted requests to suppliers last year.

Elon Musk revives $25,000 Tesla plan amid Model 3 sales drop

Musk had stated his intention to build a vehicle for $25,000 in 2020. The plan was shelved but has recently been revived. The Model 3 sedan, Tesla’s most economical model, is currently priced at $38,990 in the U.S. With Model 3 sales declining by 15% in 2023 compared to 2022, Musk may be using this move to attract more customers.

In 2023, Tesla took several steps to broaden its presence in the mainstream market. It reduced the prices of products in its lineup, sacrificing profit margin for increased volume. The reductions were particularly noticeable in China, where Musk claims it is most challenging to compete.

In the fourth quarter, China’s BYD surpassed Tesla as the world’s largest EV manufacturer. BYD offers a wide range of vehicles at various price points, from high-end luxury vehicles to mass-market budget versions.

The production of Tesla’s latest release, the Cybertruck, has faced delays. Its starting price of $60,990 is 50% more than Musk had claimed in 2019. However, after the official debut in December 2023, Tesla raised the starting prices to $79,990.

Also read: China’s BYD overtakes Tesla in quarterly sales: a new EV era?

Tesla investors question next-gen plan

Ahead of its quarterly results, investors questioned Tesla about the release of its next generation of compact cars. The company is expected to forecast a 21% increase in 2024 deliveries, significantly lower than Musk’s long-term annual target of 50% set three years ago.

In May 2023, Musk announced that Tesla was developing two new products that could collectively sell 5 million cars annually. During Tesla’s annual shareholder meeting, he stated, “The manufacturing techniques and product design are head and shoulders above anything else that is present in the industry.”

“They have been overly optimistic on most of their new product launches,” stated one of the sources. It is more likely that volume output will start in 2026.

Also read: Tesla Cybertruck finally arrives 4 years late, price double expectations

Cost-cutting endeavor

In a bid to explore cost reduction strategies, Tesla dismantled a Honda Civic priced at $23,950 in the US. Insider information indicates that Tesla’s upcoming architecture, internally known as ‘NV9X,’ is set to feature two or more versions.


Sylvia Shen

Sylvia Shen, a news reporter at BTW media dedicated in Fintech and Blockchain. She graduated from University of California, Davis. Send tips to s.shen@btw.media.

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