Tesla Working On New Smaller, Cheaper Electric Vehicle: Report

The production of the smaller Tesla electric car is expected to start at Tesla's Gigafactory in Shanghai.

Electric vehicle major Tesla is reportedly developing an all-new, compact electric SUV that would be smaller and significantly cheaper than its current entry-level models, according to a Reuters report. The project is said to mark a renewed push into the affordable EV segment, coming two years after CEO Elon Musk had shelved an earlier low-cost EV programme widely associated with the so called "Model 2" concept.

The new vehicle is described as a compact SUV, distinct in design from the Model 3 and Model Y, rather than a mere variant of existing platforms. It is expected to measure about 4.28 metres in length, making it notably shorter than the Model Y, which runs around 4.75 metres. Reports suggest that Tesla also aims to keep the car's weight close to 1.5 metric tonnes, down from the Model Y's roughly two-tonne curb mass, as part of a broader cost reduction strategy.

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To achieve a lower price tag, the vehicle is expected to feature a smaller battery pack, which would translate into a shorter driving range compared with the Model Y's roughly 526 km. It is also likely to be offered with a single electric motor, instead of the dual-motor configuration found on many current Tesla models, further helping to reduce complexity and cost. The car is projected to be priced substantially below the Model 3 positioning it more clearly in the mass-market segment.

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Production of the new SUV is expected to start at Tesla's Gigafactory in Shanghai, with plans to eventually expand manufacturing to the United States and Europe should the project move forward, as per the report. However, the initiative remains in early development, and Reuters notes that a firm production-start date has not yet been confirmed.

Tesla has not publicly commented on the report, but the move signals a potential recalibration of strategy after the company's focus shifted toward robotaxis and autonomous transport in 2024.

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