Electric vehicle maker Tesla is reportedly planning to launch production of a new compact crossover model in mid-2025, according to sources cited by Reuters this week. The new model, codenamed “Redwood,” is expected to be Tesla’s first all-new vehicle since the launch of the Model Y compact SUV back in 2020.
The Redwood’s pricing and positioning could make it the long-promised $25,000 Tesla that CEO Elon Musk has been talking about since 2018. In an interview that year, Musk told YouTuber Marques Brownlee that Tesla hoped to launch a car at that price point within “three years or so.” The timeline has clearly slipped, but Tesla may finally be gearing up to deliver on that promise.
Hitting the $25,000 price target would be key for Tesla to compete in the rapidly growing global EV market, especially against Chinese automaker BYD. BYD overtook Tesla in global EV sales in the fourth quarter of last year, according to Reuters, selling more than 930,000 EVs compared to Tesla’s estimated 405,000.
Crucially, BYD has found success by offering more affordable EV models compared to Tesla’s premium-priced vehicles. The new Redwood crossover could be Tesla’s counterpunch – an affordable, high-volume model aimed at competing for mainstream buyers.
Musk has previously outlined plans to drive down costs through advances in battery technology. The $25,000 price target likely depends on major reductions in battery costs through new cell chemistries and manufacturing efficiencies. It’s unclear if Tesla has achieved the required cost structure yet to actually produce and sell a viable EV at that price.
Tesla has struggled to hit aggressive price points in the past. The long-promised $35,000 base version of the Model 3 never stuck around for long after its 2019 launch. Meanwhile, the Cybertruck pickup truck ended up launching at $39,900 for the base rear-wheel-drive version, significantly above the $25,000 Musk originally touted.
With the Redwood reportedly on track for 2025, Tesla has a couple years to refine its design and manufacturing to potentially make the $25,000 price feasible. But industry analysts caution that it’s an extremely difficult target for a well-equipped, safe EV built at scale. For now, the Redwood represents the affordable Tesla of the future that Musk has long envisioned. Only time will tell whether the company can transform that vision into an affordable reality.