Insights that Echo Beyond the Echo Chamber


Report: Tesla Planning Entry-Level EV For Next Year

The least expensive Tesla available today, the Model 3 Rear-Wheel Drive (RWD), carries an asking price of $38,990.

The least expensive Tesla available in late 2025 may carry an asking price closer to $25,000.

Reuters reports the Texas-based company “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.”

Talking to Suppliers About Cost

Tesla routinely gives forthcoming projects code names. The current Model Y, set for a styling update this year, is internally known as Juniper.

The company has asked suppliers to provide quotes for part prices, Reuters reports.

Redwood, two sources tell Reuters, may be a compact crossover. If it’s real, it will make good on a promise CEO Elon Musk has repeated for years — to offer a sub-$25,000 electric vehicle (EV).

Production could start as soon as June 2025, three sources told Reuters. That’s an unusually aggressive schedule for a new car design, and Tesla has missed its stated production targets many times. So we wouldn’t bet on the date.

A Logical Next Move

But the product seems inevitable. Compact crossovers are the second-best-selling type of vehicle in America and cheaper to build than the first (midsize crossovers).

Tesla began as a boutique manufacturer of luxury EVs. But as economies of scale kicked in making parts cheaper, it has built more and more affordable cars. The company kicked off a price war in the EV market last year with heavy cuts to window stickers.

Those cuts, making Teslas more affordable for more buyers, drove growth. The Tesla Model Y — one of its most affordable products with a starting price of $43,990 — was the planet’s best-selling vehicle for one quarter last year.

The price of the average electric car fell by nearly a fifth in 2023, largely thanks to the price cut war Tesla started.

But the company faces new competition on every front. That includes affordable EVs, particularly outside the U.S. China’s BYD knocked Tesla off its perch as the world’s largest EV builder last year, mostly on the strength of its Model 3 rival, the BYD Seal.

Confirmation Could Come Soon

Tesla does not operate a public relations department or answer reporters’ questions. The best of the few sources we have to learn about the company’s inner workings are quarterly earnings calls when Musk often takes questions from investors.

We may learn more soon. Tesla is scheduled to reveal fourth-quarter earnings after the markets close today.


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