- Tesla is developing an affordable compact SUV, according to a new report.
- It's won't be a decontented version of the Model Y and Model 3 this time around.
- If the plans proceed, the implications could be huge.
After years of back and forth over building a truly affordable, modern electric car, Tesla appears to finally be getting serious about it.
The automaker has an all-new compact electric SUV in the works, and it won't be a stripped-down version of the current Model 3 or Model Y, Reuters reported Thursday, citing people familiar with the matter. The report offers the most detailed version yet about Tesla's affordable EV plans.
Tesla's global sales and profits have been slumping amid rising competition and a stale model lineup. The company has pivoted away from its core passenger vehicle business—which pays the bills—to invest heavily in humanoid robots and robotaxis. But those bets have yet to pay off, and its U.S. robotaxi rollout is off to a slow start. To fund its ambitious growth plans, Tesla will need to keep selling more passenger vehicles.
According to the report, the compact SUV will measure 4.28 meters in length, or about 168 inches. That’s nearly identical to the new Chevy Bolt at 169 inches, and significantly smaller than the Model Y and Model 3, which come in at 188.7 inches and 185.8 inches, respectively. A smaller battery and a single electric motor would also make it significantly cheaper than either of those models.
If the report turns out to be true, the implications would be huge. Tesla has long been synonymous with EVs, yet none of its current models are truly affordable. The Model 3 starts at $37,000 before taxes and destination fees, whereas the Model Y starts at $40,000. Rivals are already undercutting them, with the new Chevy Bolt and Nissan Leaf both starting under $30,000. Even the Model Y's direct competitors, the Hyundai Ioniq 5 and the Toyota bZ, start at $35,000.
The compact Tesla would initially be built at Gigafactory Shanghai, with production eventually expanding to the U.S. and Europe. It’s unclear whether this will be a dedicated robotaxi or a consumer vehicle with a steering wheel and pedals. According to the report, it could be both, capable of operating driverlessly or being driven by a human. That flexibility matters because many global markets are still years away from meaningful autonomous vehicle adoption, partly due to regulatory hurdles and safety concerns. A dual-purpose platform would let Tesla keep its factories humming regardless of how quickly autonomy rolls out in any given region.
That said, treat this with a healthy dose of caution. Tesla has a long history of delays and cancellations. The company unveiled the next-generation Roadster back in 2017, and production still hasn't started. The Semi heavy-duty electric truck was announced the same year and only began ramping up production this year. During Tesla's Q3 2024 earnings call, CEO Elon Musk dismissed the idea of a budget model with steering wheels and pedals. "Having a regular, 25K model is pointless. It'd be silly," he said at the time.
Still, these are the most concrete details to emerge yet about where Tesla's affordable EV plans actually stand. If it wants to hold its position among the world's top EV sellers and fend off China's fast-rising automakers, a mass-market model may be exactly what it needs.
Contact the author: suvrat.kothari@insideevs.com
