Tesla Developing New Affordable Compact Electric SUV to Be Made in China

Tesla is developing a new compact, low-cost electric SUV that is not a redesign of its existing Model 3 or Model Y. According to informed sources, Tesla has recently held discussions with suppliers about specific plans for this vehicle. The new model will be approximately 4.28 meters long—significantly shorter than the Model Y—and will be produced at Tesla’s Shanghai Gigafactory. It is targeted at a price point substantially lower than the current entry-level Model 3 sedan, which starts at around $34,000 in China and about $37,000 in the U.S. To reduce costs, the vehicle will feature a smaller battery pack, resulting in an estimated range lower than the Model Y’s 306–327 miles. A production timeline has not yet been finalized, and volume production is unlikely to begin within this year. Earlier in 2024, Tesla CEO Elon Musk canceled a low-cost EV project to prioritize fully autonomous vehicles. However, given that widespread adoption of driverless technology faces significant regulatory hurdles and remains unlikely in most markets in the near term, retaining models with conventional driving capabilities helps sustain sales volumes and factory utilization rates.