Tesla is preparing to start mass producing a new model from next year, with that model said to be a compact crossover, Reuters has reported, citing unnamed sources familiar with the plans.
The new model would be a response to Tesla fans' expectations for an affordable car, which CEO Elon Musk has been teasing for years. According to the Reuters report, the base model of the new car, which has been dubbed "Redwood", could cost as little as $25,000.
Initial production is planned at 10,000 cars per week, the unnamed sources also said, citing a request for quotes sent by the car company to auto suppliers.
A cheap model would also improve Tesla's chances of competing with low-cost Chinese EV makers, Reuters noted in its report.
The news, however, will not make European carmakers happy. The European car industry has struggled to challenge Tesla's number-one seller crown for years and for now it has been failing despite growing EV sales.
Even this is changing now: European EV sales took a dive in December driven by a 48% drop in Germany as the government abruptly ended EV subsidies. This is happening amid new threats to carmaking supply chains caused by the crisis in the Red Sea.
Speaking of that crisis, Tesla was forced to halt production at its German factory earlier this week because of delays in component deliveries caused by ship rerouting away from the Red Sea. The company imports battery components from China and the Red Sea and Suez Canal is the shortest-but no longer safest-route.
Elon Musk has been promising a cheap Tesla for four years now. It was supposed to be the Model 3 but that ended up starting at close to $39,000. Per the Reuters sources, production of the new model could begin in the middle of 2025.
By Irina Slav for Oilprice.com
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Irina is a writer for Oilprice.com with over a decade of experience writing on the oil and gas industry. More
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