Tesla Is Reportedly Working on an Affordable Compact Electric SUV

Tesla is reportedly pivoting towards developing a cheaper, more compact electric SUV to release to the market in the future.

Tesla Is Reportedly Working on Cheaper Compact SUV

Tesla is said to be developing an all-new, smaller, cheaper electric SUV, four people familiar with the matter told Reuters. According to the report, the automaker has already contacted suppliers in recent weeks to discuss the compact electric SUV as a new variant in the lineup.

Sources claimed that the compact SUV would be produced in China, and one said Tesla also aims to expand production to the United States and Europe.

Based on the report, the car would feature a length of 14 feet (4.28 meters), making it significantly shorter than Tesla's existing electric SUV, the Model Y, which features a length of 15.7 feet.

It is important to note that this is not the first time Tesla has explored a cheaper and smaller car development.

Elon Musk previously touted the development of this vehicle, initially dubbing it the "Model 2" and teasing the $25,000 price tag of this electric vehicle that was later reportedly canceled by the company.

Will It Be Cheaper than Model Y RWD?

According to the latest report, the sources claimed that this new, smaller, and less expensive electric vehicle from Tesla would be cheaper than the base Model Y electric SUV, which is best known for being rear-wheel drive (RWD).

The current cheapest electric SUV variant from Tesla is the Model Y RWD, which only costs $39,990 without tax reductions yet.

On the other hand, it will also be cheaper than the Model 3 RWD, which starts at $37,000 in the US, also without tax reductions.

According to the report, Tesla is planning to use a smaller battery for this cheaper electric SUV that would have less range compared to the Model Y RWD's 327 miles of estimated range. Additionally, it will also offer a single electric motor.