Electric vehicle manufacturer Tesla has revealed to its suppliers that it intends to start producing a new mass-market battery electric car dubbed Redwood in mid-2025. According to those familiar with the matter, Tesla’s new electric car will be a next-generation compact crossover.
Last year was a mixed bag for Tesla, mainly due to China’s swiftly growing EV sector and market forces. Although the Texas-based EV maker reported record sales in 2023, the company was forced to contend with significant competition from cheaper Chinese electric cars and was ultimately surpassed by BYD as the top EV company in the last quarter of the year.
Falling electric vehicle demand in late 2023 across most major electric vehicle markets also impacted the U.S. carmaker. Even so, Tesla is seemingly preparing to debut an entirely new electric car over the next few years. During a recent post-earnings call, Tesla CEO Elon Musk said the EV giant will begin production on the new EV in the second half of next year at its Texas facility.
Musk noted that the company would then start producing the new EV in Mexico before further outsourcing production to another facility outside North America. The often-controversial executive acknowledged that ramping up manufacturing for an entirely new EV model will be challenging
Musk has spent the past few years hyping up affordable battery electric vehicles and self-driving electric cars. While Tesla still hasn’t delivered a fully self-driving EV, developing a $25,000 BEV could finally allow the company to tap into the massive market of regular drivers who cannot afford to buy EVs at the current prices. Such an affordable electric car would finally give Tesla a chance to compete with Chinese automakers, including BYD, that can sell their EVs at much lower price points thanks to massive EV subsidies from the Chinese government.
Musk first promised to develop a $20,000 EV for the mass market in 2002 before shelving and later reviving the plan. At the moment, Tesla’s most affordable vehicle is the Model 3 Sedan, which has a $38,990 starting price in the Unites States, compared to BYD’s most affordable offering, the Seagull, which costs only $10,200.
Tesla’s recent quarterly results report revealed that the company’s 2024 vehicle volume growth rate may be lower compared to last year as the company will primarily focus its efforts on the launch of the next-gen electric car at Gigafactory Texas.
With major players in the EV industry like Tesla planning to debut low-cost models in the coming years, competitors such as VinFast Auto Ltd. (NASDAQ: VFS) must up their game if they are to survive in the long-term.
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