Elon Musk, the CEO of Tesla, has consistently tantalized fans and investors with the promise of affordable electric vehicles and self-driving robotaxis. These groundbreaking vehicles are expected to be built on next-generation, more cost-effective electric car platforms.
The upcoming models, including an entry-level $25,000 car, are positioned to compete with lower-priced gasoline-powered cars and the increasing number of budget-friendly EVs, such as those produced by China's BYD.
Interestingly, BYD surpassed Tesla as the world's leading EV manufacturer in the final quarter of 2023, marking a notable shift in the competitive landscape. Musk initially pledged to create a $25,000 car in 2020, a plan that underwent shelving and revival. Currently, Tesla's most affordable offering is the Model 3 sedan, starting at $38,990 in the United States.
Last year, Musk expressed concerns about the impact of high-interest rates on consumer demand for significant purchases like cars. Tesla initiated the process for the "Redwood" model, sending out "requests for quotes" to suppliers and projecting a weekly production volume of 10,000 vehicles. Production is expected to commence in June 2025, according to anonymous sources familiar with the matter.
Investors eagerly sought information on the timing of next-generation compact vehicles ahead of Tesla's quarterly results report.
The company is anticipated to forecast a 21% increase in 2024 deliveries, falling short of Musk's long-term annual target of 50% set three years ago.
Musk, in May, disclosed that Tesla was working on two new products with the potential for combined annual sales of 5 million vehicles. He emphasized the superior design and manufacturing techniques of these products, positioning them ahead of industry standards.
As outlined in Walter Isaacson's biography of Musk, Tesla plans to develop an inexpensive robotaxi and an entry-level $25,000 electric car based on the same vehicle architecture. Musk previously announced plans for a dedicated self-driving taxi with a futuristic look in 2024.
However, Tesla's history of missing targets for launches and pricing suggests that building volume and achieving profitability from these cheaper EVs might take time.
The affordable model is expected to initially roll off the production line at Tesla's Texas factory, according to Musk. To understand how to create more economical cars, Tesla reportedly studied a Honda Civic, whose starting price in the United States is $23,950. The upcoming Tesla architecture, codenamed "NV9X," is set to include two or more models.
In addition to its Texas facility, Tesla also plans to produce cheaper cars in its Berlin factory and is exploring the possibility of establishing a factory in India. With factories in Shanghai and Fremont, California, Tesla's global footprint continues to evolve in its pursuit of reshaping the electric vehicle landscape.