Tesla (TSLA.O), opens new tab has told suppliers it wants to start production of a new mass market electric vehicle codenamed “Redwood” in mid-2025, according to four people familiar with the matter, with two of them describing the model as a compact crossover.
Tesla CEO Elon Musk confirmed on a post-earnings call on Wednesday that the company expects to start production of its next-generation EV at its Texas factory in the second half of 2025.
That will be followed by Mexico and another factory outside North America to be decided later this year, he said, noting that ramping up production of the new vehicle would be challenging.
Musk has long whetted fans’ and investors’ appetites for affordable electric vehicles and self-driving robotaxis that are expected to be made on next-generation, cheaper electric car platforms.
Those models, including an entry-level $25,000 car, would allow it to compete with cheaper gasoline-powered cars and a growing number of inexpensive EVs, such as those made by China’s BYD.
BYD overtook Tesla as the world’s top EV maker in the final quarter of 2023.
Tesla on Wednesday said the next-generation vehicle would drive a new wave of growth.
“In 2024, our vehicle volume growth rate may be notably lower than the growth rate achieved in 2023, as our teams work on the launch of the next-generation vehicle at Gigafactory Texas,” Tesla said in a quarterly results report.
Musk had first promised to build a $25,000 car in 2020, a plan he later shelved and then revived. Tesla’s cheapest offering, the Model 3 sedan, currently has a starting price of $38,990 in the United States.
Timing of next-generation compact vehicles, opens new tab was one of the most voted questions by investors to Tesla ahead of its quarterly results report on Wednesday afternoon, where it is expected to forecast a 21% rise in 2024 deliveries, well below the long-term annual target of 50% that Musk set about three years ago.
Musk said in May that Tesla was working on two new products, with the potential for combined sales of 5 million vehicles a year. “Both the design of the products and manufacturing techniques are head and shoulders above anything else that is present in the industry,” he said at Tesla’s annual shareholder meeting.
Tesla plans to make an inexpensive robotaxi and an entry-level, $25,000 electric car based on the same vehicle architecture, according to Walter Isaacson’s biography of Musk released in September, which includes interviews with the CEO and executives.
Musk said in 2022 that Tesla would make a dedicated self-driving taxi with a futuristic look in 2024, after several misses at its goal of achieving full self-driving capability.
He and other Tesla executives laid out plans last March to halve the cost of its next-generation vehicles, but did not provide a timeframe for the launches.
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Tesla has a track record of missing its targets for launches and pricing, and it would take time to build volume.
Cybertruck production, for instance, has been delayed and slow to accelerate and its $60,990 U.S. starting price is 50% higher than Musk touted in 2019.
“They have been overly optimistic on most of their new product launches. Volume output is more likely to begin in 2026,” one of the sources said.
Musk said on Wednesday: “I’m often optimistic regarding time. But our current schedule shows that we will start production towards the end of 2025” and that “We’ll be sleeping on the line practically.”
Making a profit from the cheaper EVs will be challenging, given the costs of batteries as well as traditional difficulties producing quality inexpensive vehicles.
Tesla in recent years tore down a Honda (7267.T), opens new tab Civic, whose price starts at $23,950 in the United States, to study how to make cheaper cars, two separate sources said.
The next-generation Tesla architecture, internally called “NV9X,” will include two or more models, said the two people and one of the initial sources.
Tesla also plans to build cheaper cars at its factory near Berlin, and is interested in building a factory in India to produce less expensive electric cars, sources said previously.
Tesla and Panasonic partner Redwood Materials has broken ground on a $3.5 billion battery plant in South Carolina, set to be the JB Straubel-led company’s second.
Redwood Materials broke ground on the South Carolina battery materials facility last week, as announced by Director of Public Affairs and Government Relations Morgan Crapps in a LinkedIn post. Located outside of Charleston, the plant will be used to recycle, refine, and manufacture anode and cathode components, not unlike the company’s Nevada materials location.
“And we’re off! Redwood Materials has officially broken ground in South Carolina at our second Battery Materials Campus! An exciting milestone as we move one step closer to closing the loop and creating a circular supply chain for battery materials here in North America,” wrote Crapps in the post.
I remember reading about Musk in the early 2000s when the plan was always to build a luxury car first, then a mid-size, then an economy. It’s good news about this finally happening.
Two notes, though: Musk is always about 2x ahead in his time predictions in what actually happens, and even with that he’s talking about having his workers “sleep on the factory floor” – never a good thing as far as quality control:
https://www.businessinsider.com/elon-musk-warns-tesla-workers-challenging-production-mass-market-ev-2024-1
On my ongoing learning curve as an eMini owner I have learned the next generation this year is no longer made in England but at a new facility at the BMW campus in Germany … and will soon open a facility in China. Mostly trivia ~ I don’t think the next generation is as good a car as the one I bought just a year ago, though I wouldn’t mind having double the range
If you want to learn some more really interesting stuff EV specific but mostly trivial look up run-flat tires. They are as big an advance as the EVs …