Reuters reports that Tesla is developing a compact electric SUV that would be smaller and cheaper than the company’s current lineup.
Four sources close to the automaker confirmed Tesla has reached out to suppliers about manufacturing plans for the new model. The vehicle represents an entirely new platform – not a variant of the existing Model 3 sedan or Model Y crossover.
Specifications and Production Timeline
The compact SUV would measure 4.28 meters long, positioning it between B- and C-segment categories. That’s notably shorter than Tesla’s bestselling Model Y, which stretches 4.57 meters.
Two sources indicated the vehicle would cost less than the entry-level Model 3, which currently starts at $37,000 in the United States.
Tesla plans to reduce costs through a single-motor electric drivetrain and smaller battery pack compared to existing models. Initial production would take place at Gigafactory Shanghai, with manufacturing later expanding to facilities in the United States and Europe.
The timeline remains unclear. Production isn’t expected to begin this year.
Tesla’s Track Record on New Models
Tesla’s development history suggests caution about any new vehicle announcements.
The Tesla Roadster was unveiled in 2017 with a promised 2020 production date. That timeline has shifted repeatedly – through 2022, 2023, 2024, and 2025. Elon Musk recently stated production would begin in April 2026.
In 2020, Tesla announced plans for a $25,000 Model 2. By 2024, Musk called the project “silly” and “pointless” as the company shifted focus toward autonomous vehicles and its Robotaxi program.
The Model S and Model X faced similar uncertainty in Europe. Tesla discontinued both models last August, quietly reintroduced them in October, then eliminated them again in January as the company repurposed its Fremont factory for Optimus robot production.
Most recently, Tesla announced a final “Signature” edition of both models for 350 select customers.
The compact SUV discussions represent Tesla’s latest attempt to expand into more affordable market segments while maintaining its position in the rapidly growing EV sector.
