Key Points:
- Tesla is reportedly developing a smaller, cheaper electric SUV.
- The new SUV is expected to be produced in China, with potential expansion to the US and Europe.
- This project could signal a strategy shift towards mass-market EVs or align with autonomous vehicle plans.
- Tesla has a history of product delays and cancellations, making the SUV’s future uncertain.
Tesla is reportedly working on a brand-new, smaller, and more affordable electric SUV. Four people familiar with the matter shared this information with Reuters.
The automaker has recently contacted suppliers to discuss details for this compact SUV. This vehicle would be entirely new, not just a variation of Tesla’s current Model 3 or Y, sources said. These discussions involved manufacturing processes and specifications for various parts.
Three sources mentioned that the compact SUV would be made in China. One person also added that Tesla aims to expand production to the United States and Europe. Two sources stated the car would be 4.28 meters (about 14 feet) long. This is noticeably shorter than Tesla’s popular Model Y SUV, which is around 15.7 feet long.
This effort comes after CEO Elon Musk decided in 2024 to scrap a highly anticipated low-cost electric vehicle project. Instead, he shifted the company’s focus to robotaxis and humanoid robots. A key question is whether this new smaller SUV project signals a return to mass-market, human-driven electric vehicles, or if the new model will fit with Tesla’s vision for fully self-driving cars.
Such a model could serve both purposes, according to one person familiar with the new vehicle project and a Tesla employee who knows the company’s current product strategy. The Tesla employee did not confirm or deny details of any specific vehicle but said, in general, that the automaker now aims to build models that could be driverless but also offer a human-driving option.
While Tesla is pursuing a fully autonomous lineup, the person noted that many global markets won’t see widespread adoption or legal acceptance of driverless vehicles for years. Keeping the option to build a model with or without driving controls could lead to more sales and help Tesla keep its factories running at high capacity.
As Tesla pursues a driverless future, some analysts predict a third consecutive year of declining sales for its traditional electric vehicles, which provide most of its income. Currently, Tesla operates a small number of robotaxis only in Austin, Texas, often with human safety monitors in the passenger seat.
Tesla did not respond to requests for comment about plans for a new vehicle. The four people familiar with the project said it is still in an early stage of development. Reuters could not confirm whether Tesla has officially approved the car’s production.
The automaker has a history of starting development on products that face long delays or get canceled. For example, Tesla showed off concept vehicles for a Roadster supercar and a Semi freight truck in 2017 but has yet to mass-produce either.
