Rumors Suggest Tesla Redwood as a Possible $25K Compact Crossover EV
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Rumors Suggest Tesla Redwood as a Possible $25K Compact Crossover EV

Tesla Redwood rumored to possibly be a $25K Tesla compact SUV EV
  • Reuters reported that Tesla Motors may be planning to begin producing a new mass-market electric vehicle (EV) in mid-2025, code-named Redwood.
  • Four confidential sources reported the information to Reuters.
  • Redwood may be a compact crossover and may give the company a presence in the economy car market with a $25K Tesla EV.

On January 24, 2024, Reuters reported momentous rumors from Tesla Motors. Four people familiar with the matter said Tesla notified some of its suppliers that it wants to begin production of a new mass-market electric vehicle (EV) in mid-2025, code-named Redwood. The four people confirmed that the Tesla Redwood project was a compact crossover. It may be the long-awaited $25K Tesla EV, which has been the subject of rumors and is sometimes referred to as the Tesla Model 2.


Tesla Redwood and Elon Musk’s Affordable EV Vision

Tesla’s enigmatic CEO, Elon Musk, has mentioned affordable electric vehicles to investors and fans many times. These vehicles are expected to be produced on cheaper, next-generation car platforms.

In Tesla’s recent quarterly report to investors, the timing of next-generation compact vehicles was one of the most voted questions. Tesla is expected to forecast a 21% rise in 2024 deliveries. This is well below the long-term annual target that Musk set about three years ago.

Tesla automaker employee working on a car

At Tesla’s annual shareholder meeting in May, Musk said Tesla was working on two new products. The two products have a potential for combined sales of five million vehicles per year. “Both the design of the products and manufacturing techniques are head and shoulders above anything else that is present in the industry,” said Musk.

The new models, including an economy-class $25K Tesla EV, would allow Tesla to compete with less expensive internal combustion engine (ICE) vehicles and could really shake things up in the EV industry. Musk first promised a $25K Tesla EV in 2020, which was then delayed and now apparently revived.


A growing number of inexpensive EVs, for example, BYD’s Seagull, are threatening to take market share away from Tesla. The Tesla Redwood $25K Tesla EV is expected to address that threat. Tesla’s Model 3 sedan currently has a starting price of $38,990 in the United States and is Tesla’s lowest-priced model at this time.

Tesla’s Plan for a $25K EV to Boost Adoption

In the final quarter of 2023, BYD overtook Tesla as the world’s leading electric vehicle producer.

Last year, Musk showed concern about the important impact of high interest rates on EV consumer demand for expensive items such as vehicles.

Image showcasing 2024 Tesla Model 3 Highland front driver profile

Tesla sent “requests for quotes,” or invitations for bids for the Tesla Redwood model, to suppliers in 2023. Two of Reuter’s sources said Tesla is forecasting a weekly production volume of 10,000 vehicles. Three of the sources said production would begin in June 2025. All of the sources remained anonymous because of the confidential nature of the information.

Low-priced models have been noticeably missing from the current lineup of new EVs. As of December 2023, the average selling price for a new car (EV or ICE) was $48,759, according to Kelley Blue Book. KBB listed the average new electric car price as $50,798 in December. New EV prices are falling but not quite below ICE prices yet. High prices have been one of the most serious barriers slowing EV adoption. There are many other barriers, mostly within the EV charging sector, which are being addressed by billions of dollars in government grants.

Image showcasing blue Tesla Model X from EV's Republic

A low-priced $25K Tesla EV would work wonders for EV adoption in America. According to S&P Global Mobility, experts say growth in EV adoption will continue at a rapid pace in 2024. In a recent report, the firm forecast that global sales of battery electric vehicles (BEVs) will enjoy nearly 40% year-over-year growth in 2024, rising to claim a 16.2% market share. While the EV movement is moving quickly, a low-priced $25K Tesla EV would give it a much-welcomed boost.



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