Tesla is evaluating a smaller electric sport utility vehicle positioned below the Model Y as it considers expanding into a lower-priced segment, Reuters reported, citing people familiar with the matter.
The proposed model would be a compact SUV smaller than the Model Y and priced below Tesla’s current entry-level vehicles, according to the report.
Reuters said Tesla has recently held discussions with suppliers regarding components for the vehicle, which would be developed as a standalone model rather than a derivative of the Model 3 or Model Y.
The compact SUV is expected to measure about 4.28 meters in length, roughly half a meter shorter than the Model Y, Reuters reported.
To reduce weight and lower costs, Tesla is considering a smaller battery pack, which would likely reduce driving range compared with the base Model Y, according to the report.
Reuters said it could not confirm whether the project has received final production approval.
If approved, production is unlikely to begin before 2027, with Tesla’s Giga Shanghai plant viewed as the most likely initial production site, Reuters reported. Production in Grünheide, Germany, or the United States could follow later.
Tesla has for years faced speculation over plans for a lower-cost mass-market vehicle. The company had previously been reported to be developing a $25,000 model before shifting focus toward autonomous driving, artificial intelligence and its Cybercab program.
