Tesla is quietly working on a bold new project that could finally bring electric mobility within reach for a much wider audience. According to a recent Reuters report, the EV giant is in the early stages of developing an all-new compact SUV designed to sit noticeably below the popular Model Y in size and, more importantly, in price.
This upcoming entry-level electric SUV is expected to be significantly cheaper than Tesla’s current most accessible model — the Model 3 sedan, which starts at around USD 37,000 (roughly ₹34.31 lakh) in the United States. Sources familiar with the matter say the new vehicle could undercut even the base Model 3, making it Tesla’s most budget-friendly offering to date.
Unlike a simple refreshed or stripped-down version of the existing lineup, this will be an entirely new model from the ground up. In recent weeks, Tesla has reached out to several suppliers to discuss component specifications, manufacturing processes, and other key details for the compact crossover.
The new SUV is reportedly around 4.28 meters (approximately 14 feet) in length — notably shorter and more compact than the Model Y, which measures about 4.79 meters. To achieve a substantially lower price point, Tesla is expected to focus on cost-saving measures such as:
- A smaller battery pack
- A single electric motor setup (instead of dual motors)
- A lighter overall vehicle weight, targeting roughly 1.5 metric tons compared to the Model Y’s nearly 2 tons
These changes will likely result in a shorter driving range than Tesla’s current SUVs, but the trade-off aims to make electric vehicles more accessible to price-sensitive buyers, especially in highly competitive markets like China.
Insiders indicate that initial production of this compact SUV is likely to begin in Tesla’s Shanghai Gigafactory in China, with potential expansion to the United States and Europe later on. The project remains in its early development phase, and no official timeline or exact pricing has been confirmed by Tesla.
This development comes after Tesla had previously shifted focus away from a low-cost “Model 2” style vehicle toward robotaxis and autonomous technology. The renewed interest in an affordable compact SUV suggests the company may be balancing its long-term vision of self-driving cars with the immediate need to broaden its customer base and counter growing competition from more budget-friendly EVs.
If the project moves forward as described, the new entry-level SUV could play a crucial role in helping Tesla regain momentum in the mass-market EV segment. It would directly target buyers who find the current Model 3 and Model Y pricing out of reach, potentially accelerating the adoption of electric vehicles globally.
While many details are still under wraps — including the final name, exact specifications, and launch timeline — this compact SUV represents Tesla’s latest attempt to make premium electric driving more affordable without compromising on the brand’s core DNA of innovation and performance.
