By June 2025, Austin-based Tesla disclosed to its suppliers plans to start producing a new electric vehicle (EV) mass-market known as “Redwood,” according to Reuters. Elon Musk has been generating interest among investors and EV enthusiasts by promising the production of low-cost EVs and self-driving robotaxis on more affordable, next-generation platforms.
With a goal of producing 20 million cars annually by the end of the decade, Tesla will have to increase the number of automobiles in its inventory swiftly. Meaning the company will require both more affordable and newer cars in its lineup.
Musk expressed concern last year about how high interest rates would affect consumer demand for expensive goods like vehicles. Last year, Tesla invited suppliers to submit “requests for quotes,” or bids, for the “Redwood” model, with a projected weekly manufacturing capacity of 10,000 cars. This translates to an annualized rate of 500,000 vehicles.
Additionally, one of the most popular questions investors posed to Tesla ahead of its quarterly results report on January 24 afternoon was, “When will next-generation compact vehicles be released?” The company is expected to forecast a 21% increase in 2024 deliveries, which is a significant drop from Musk’s long-term annual target of 50% set around three years ago.
Tesla has a history of missing its price and launch targets, and increasing volume would take time. For example, Cybertruck manufacturing has been sluggish to start and has been delayed. The U.S. starting price for the vehicle is now $60,990, which exceeds Musk’s 2019 claim by 50%.
The EV maker has launched most of their new products with excessive optimism. Sources suggest that volume production is more likely to begin in 2026. Additionally, last year, Musk announced that Tesla’s Texas factory would take the lead in producing the entry-level model.
Ultimately, the company claims that it will be tough to profit from the less expensive EVs, considering the expense of batteries and the ongoing challenges in building high-quality, low-cost vehicles.