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Tesla’s new compact crossover is reportedly coming in 2025, but will it cost $25,000?

Tesla’s new compact crossover is reportedly coming in 2025, but will it cost $25,000?

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The vehicle, codenamed ‘Redwood,’ could be the entry-level $25,000 car that Tesla has previously teased, and would help it compete with Chinese automaker BYD.

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Series of concept sketches on paper on a desk.
Concept Tesla design images shown off in a recent corporate video.
Image: Tesla

Tesla is eying a June 2025 kickoff for production of a new mass-market compact crossover, Reuters reports. The company has apparently invited suppliers to bid to work on the car, and is forecasting producing 10,000 vehicles weekly.

Following publication of this story, Tesla CEO Elon Musk responded to a question about “next-generation platform vehicles” during an earnings call by saying production would start “towards the end of 2025.” He also said the first manufacturing location for the company’s next-gen vehicle would be in Austin, Texas. No specifics on the features or pricing of the vehicles were offered, and Musk warned that his timeline “should be taken with a grain of salt” due to the complexities of developing new manufacturing technologies. “You have to design a machine that has never existed to build a car in a way that has never existed,” added Musk.

Reuters report that production of the next-generation vehicle could be just a year and a half away comes as Tesla is facing intense competition in the electric vehicle market from BYD, a Chinese automaker that Reuters reports overtook Tesla to become the world’s top EV maker by sales in the fourth quarter of 2023. While BYD has grown rapidly off the back of its affordable cars, The Wall Street Journal notes that it’s moving into selling more premium vehicles, bringing it into competition with Tesla.

Could this be Tesla’s $25,000 car?

The company’s CEO Elon Musk has previously teased a next-generation Tesla car with  a more affordable $25,000 price point. He mentioned the price target in a 2018 interview with YouTuber Marques Brownlee, and in 2020 said that reducing the cost of an electric vehicle’s battery cells and packs would allow the company to reach this more aggressive price point. 

Last year Musk’s biographer Walter Isaacson told Axios that the car would have a futuristic Cybertruck-style design and be developed alongside an autonomous robotaxi. The company teased a pair of new vehicles at an investor event in March, with one appearing to be a smaller car and the other a small commercial truck. 

Although Musk has publicly talked about Tesla’s plans to offer a vehicle priced at $25,000, the company has struggled to hit aggressive price targets like these in the past. For years, Musk’s stated aim was to release a Model 3 car costing $35,000, but that model didn’t stick around for long. Meanwhile the Cybertruck was eventually released with a starting price of $60,990, up from the $39,900 it was announced with four years earlier.

Prior to starting deliveries of the Cybertruck late last year, Tesla’s last all-new car was the Model Y — a mid-size SUV that started deliveries in the US in early 2020. Its other three consumer vehicles, the Model S, Model X, and Model 3, started shipping in 2012, 2015, and 2017, respectively.

Update January 25th, 3:31AM ET: Updated with Elon Musk’s comments during Tesla’s earnings call.