Tesla's affordable EV "Redwood" compact crossover coming 2025

24 January 2024

According to a Reuters report, Tesla plans to introduce a new mass-market electric vehicle codenamed "Redwood" by mid-2025, marking a significant shift in its strategy to compete in the affordable EV market. This move comes after China's BYD overtook Tesla as the world's top EV maker in late 2023, prompting Tesla CEO Elon Musk to revisit his promise of a $25,000 entry-level EV, a promise made back in 2020 but shelved and now resurrected.

The Tesla Redwood project, described by insiders as a compact crossover, is poised to reshape the landscape of affordable electric cars. The company is taking a leap into the mid-market segment, targeting consumers looking for cost-effective alternatives to traditional gasoline-powered vehicles and the growing array of budget-friendly EVs, particularly those produced by China's BYD.

Musk's ambition to provide affordable EVs has long tantalized fans and investors alike. The Redwood, along with its promised $25,000 entry-level price, is expected to be built on a next-generation, cost-effective EV platform, effectively positioning Tesla to compete more aggressively with both conventional gas-powered cars and its EV competitors.

Tesla has initiated discussions with suppliers, sending out "requests for quotes" for the Redwood model. Sources have hinted at a projected weekly production volume of 10,000 vehicles, with production slated to commence in June 2025.

The timing of Tesla's next-generation compact vehicles has been a matter of great interest to investors. Musk had previously announced that Tesla was working on two new products with a combined sales potential of 5 million vehicles per year. The CEO lauded these products' design and manufacturing techniques, touting them as superior to anything else in the industry. However, Musk's past record of missing launch targets and price estimates, as seen with the Cybertruck, raises skepticism about the proposed timeline. It's quite possible that significant volume production may not begin until 2026.

One crucial aspect of Tesla's plan is to produce an affordable robotaxi along the Redwood electric car, both based on the same vehicle architecture. This strategy, as revealed in Walter Isaacson's biography of Musk, aligns with Tesla's ambition to revolutionize transportation through autonomous driving technology. However, Musk's previous statements about achieving full self-driving capability are yet to be realized, although the latest FSD V12 shows a lot of promise.

Making a profit from these cheaper EVs will be a formidable challenge for Tesla. The cost of batteries remains a substantial hurdle, as well as the traditional difficulties associated with producing quality inexpensive vehicles. Tesla has even gone so far as to dissect a Honda Civic, a budget-friendly gasoline car, to understand the intricacies of creating more cost-effective cars.

Tesla's next-generation architecture, internally referred to as "NV9X," is expected to include multiple models, adding further complexity to the company's ambitious plans. Additionally, Tesla intends to manufacture more affordable cars at its factory near Berlin and is exploring the possibility of building a factory in India to produce lower-priced electric vehicles.

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