Tesla is weighing a new, smaller electric SUV that could be priced below its current entry-level Model 3, Reuters reported, citing source.
The report said the EV maker has recently begun early discussions with suppliers about how the vehicle could be built and what components would be required.
Sources cited by the news agency indicated the SUV is being developed as an all-new model rather than a shortened or modified version of existing vehicles such as the Model 3 or Model Y.
The move comes amid signs of moderating demand growth for Tesla’s core electric vehicle range, which continues to account for the bulk of its revenue.
In terms of dimensions, the proposed SUV would measure approximately 4.28m in length - more compact than the Model Y, which spans close to 4.8m.
Reuters' sources indicated that pricing would undercut Tesla's current entry-level offering, the Model 3, which retails from around $34,000 in China and $37,000 in the US.
Initial production is expected to be centred at Tesla's Shanghai factory, with possible expansion to the US and Europe further down the line.
However, manufacturing is not anticipated to begin this year, and no confirmed timeline has been established.
Sources stressed that the project remains at an early stage and has yet to receive final approval to proceed.
Cost reduction on the model is expected to be achieved through a smaller battery pack, a single-motor drivetrain, and a lighter overall build - targeted at roughly 1.5 tonnes, compared with approximately two tonnes for the Model Y.
Notably, the proposed vehicle may be designed to accommodate both autonomous and conventional driving modes.
A source familiar with Tesla’s development approach told Reuters that the company plans to engineer vehicles that can operate without driver input while still allowing manual driving.
The decision reflects differing regulatory environments and uneven rates of autonomous-vehicle adoption across markets.
The potential new model follows a 2024 decision by CEO Elon Musk to shelve plans for a low-cost EV platform, opting instead to prioritise developments in robotaxis and humanoid robotics.
Tesla's ambitions in the autonomous space include the planned Cybercab robotaxi, though regulatory approvals and commercial timelines for fully driverless systems remain unresolved.
The report also highlighted Tesla’s history of delays and cancellations across its product pipeline, including the Roadster and Semi models first unveiled in 2017, which have yet to reach large-scale production.
Just Auto has reached out to Tesla for comment on the matter.
