Tesla CEO Elon Musk confirmed during the Q4 2023 earnings call the company plans to launch a new, more affordable electric vehicle (EV) model in the second half of 2025. This announcement came less than 24 hours after a report emerged that Tesla was planning to begin production of a compact crossover codenamed Redwood in mid-2025.
During the call Musk, known for his sometimes overly optimistic timelines, indicated that the production of this next-generation vehicle will start at Giga Texas, with subsequent production expected at Giga Mexico, without providing a timeline for that expansion. Musk also said production would take place at a third factory, the location of which is undetermined at this point, but a decision is expected to be made before the end of the year.
While the exact price point remains undisclosed, this new model is expected to be the $25,000 entry-level EV that has been talked about for years. Despite the long-term cost savings associated with EVs, their higher initial price points compared to conventional gas-powered vehicles remain a barrier to wider adoption.
If Tesla achieves this pricing, it would mark a significant milestone, offering the cheapest EV on the U.S. market and competing head-to-head with budget EVs from international manufacturers.
The launch of this new Tesla model is anticipated to be a game-changer, leveraging what Musk describes as “revolutionary” manufacturing technology. However, Tesla’s track record of delayed deliveries, including the Cybertruck and the second-generation Roadster, has led to a cautious reception of Musk’s latest product timeline.