Tesla Reportedly Developing New Electric SUV Priced Below the Model 3

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Summary

  • Tesla is reportedly developing an all-new compact electric SUV in Shanghai, aiming for a price point well below the Model 3
  • The scaled-down vehicle features a lighter frame, single motor, and a smaller battery pack to dramatically cut production costs
  • The pivot bridges the gap between traditional driving and full autonomy, equipping the EV with a steering wheel for markets not yet ready for driverless tech

Tesla is planning a major change in its strategy for more affordable cars. After much discussion and adjustments to its plans, the company is reportedly developing a brand new, small electric SUV. This new model is expected to be significantly cheaper than Tesla’s current vehicles and is being designed and built in Shanghai. Unlike previous attempts to create lower-priced options, this vehicle won’t simply be a smaller version of existing cars; it’s a completely new design focused on making electric vehicles more accessible.

The new vehicle is projected to be around 14 feet long, making it almost two feet shorter than the popular Model Y. To keep the price well under $37,000 – cheaper than the Model 3 – Tesla is focusing on significantly reducing production costs. This smaller SUV will likely feature a lighter design, a single electric motor, and a smaller battery, which will result in a shorter driving range. Tesla has already started contacting suppliers to finalize manufacturing plans and secure the necessary parts for this simplified model.

This change marks a significant shift in direction for Tesla, moving away from CEO Elon Musk’s earlier plans. Earlier this year, Musk put plans for a $25,000 car on hold to prioritize the Robotaxi program and the fully self-driving Cybercab. Now, the company appears to be adjusting to the challenges of getting approval for self-driving technology. The new vehicle is designed to be mostly self-driving, but importantly, it will still have a steering wheel and pedals. This allows the car to be sold and used in countries where fully autonomous driving isn’t yet legal, as those laws are still years away from being approved.

Tesla is making a key change in direction at a challenging time. The company is under increasing pressure due to missed sales goals and slow growth in important international markets. Although its self-driving technology is preparing for large-scale production in Texas, there’s a growing need for an affordable car that many people can buy. While company leaders haven’t announced when the new, lower-priced SUV will be available, and considering past delays, customers may have to wait some time before it’s released.

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2026-04-10 10:56