Tesla plans smaller, cheaper EV; global production expansion likely

Tesla is developing an all-new smaller, cheaper electric SUV, four people familiar with the matter told Reuters. The automaker has contacted suppliers in recent weeks to discuss details of the plan for the compact SUV which would be a new vehicle and not a variant of Tesla’s current Model 3 or Y, the people said. 

 

The conversations involved the manufacturing pro- cess and specifications for various components, they said. Three of the people said the compact SUV would be produced in China, and one said Tesla also aims to expand production to the United States and Europe. The car would be 4.28 meters in length, or about 14 feet, two of the sources said. 

 

 

That’s significantly shorter than Tesla’s top-selling Model Y SUV, which is about 15.7 feet long. The effort follows a decision by Chief Executive Elon Musk to scrap a highly anticipated low-cost EV project in 2024 and pivot the company to focus on robotaxis and humanoid robots. 

 

A key question is whether this latest effort to develop a smaller SUV signals a strategy shift back to mass-market human-driven EVs or whether the new model would align more with Tesla’s vision for fully autonomous vehicles. Such a model could potentially serve both purposes, according to one of the people familiar with the new-vehicle project and a Tesla employee with knowledge of its current product philosophy. 

 

The Tesla employee declined to confirm or deny details of any specific vehicle but said, in general, the automaker now aims to build models that would be driverless but offer a human-driven option. 

 

While aiming for full autonomy across its lineup, the person said, Tesla realises many global markets won’t see meaningful adoption nor regulatory acceptance of driverless cars for years. Preserving the option to build a particular model with or without driving controls could enhance sales and help ensure Tesla can keep its car factories running near capacity, the person said.