Tesla’s $25,000 Model 2 crossover: What we know

The future at Tesla is less than clear, as substantial layoffs, recalls, production delays, and general instability have crept up in recent months. After years of speculation, and something of a tease by CEO Elon Musk at Battery Day in 2020, Tesla had initially confirmed it was working on a next-generation and more affordable EV in 2024. Following an early 2024 report from Reuters, Musk spoke about the project, dubbed Redwood, during Tesla’s Q4 2023 earnings call on Jan. 24, 2024.

“Our current schedule says that we will start production toward the end of 2025, so sometime in the second half,” Musk said. He then hedged on the timeline, adding, “We — I mean, I won’t certainly say — say things with — they should be taken with a grain of salt since I’m often optimistic. But, you know, I don’t want to blow your minds, but I’m often optimistic regarding time.” Reuters recently published a report claiming Tesla had shelved the Model 2 to focus on robotaxi development, something Elon Musk was quick to dispute. While we were set to find out more about the Robotaxi during an August 8th unveiling, the reveal has now been pushed back until at least October of this year.

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Shareholders and the press got their first real update, and something of an admission that plans had shifted, during the company’s most recent earnings call. In discussing Q1 2024 earnings, Musk stated that new, more affordable Tesla models would go into production in “early 2025, if not late this year.” Though Tesla also stated that these new cars will be built using the company’s current production platform and manufacturing facilities, a far cry from the revolution that was promised as the genesis of the rumored Model 2. So it seems clear that this somewhat mythological project may have been pushed even further down the road.

While we wait for Redwood to eventually, possibly, arrive, here’s everything we know about the project, including a brief look at its history.

A short Tesla and Musk history lesson

The Master Plan

In 2006, Musk laid out his plan for how Tesla would one day manufacture a mass-market and affordable electric vehicle, aiming to shift consumers from fossil fuel-powered vehicles to a new electric standard. He said the company would accomplish this in part by starting with luxury EVs like the Tesla Roadster, and then working its way down to more affordable models.

“The strategy of Tesla is to enter at the high end of the market, where customers are prepared to pay a premium, and then drive down market as fast as possible to higher unit volume and lower prices with each successive model,” Musk wrote at the time.

In 2008, Tesla released the Tesla Roadster, a high-performance sports car that would serve as the company’s debut vehicle. Following the Roadster, it introduced the Model S in 2012. At the time, the Model S pushed the boundaries of what an EV could offer both in terms of range and performance. The Tesla Model X arrived in 2015, adding an SUV for the first time to Tesla’s lineup.

In 2017, Tesla launched the Model 3, and while the company missed the mark in selling the Model 3 as cheaply as it had hoped, it was in fact a more affordable electric sedan aimed at the mass market. In reality, the Model 3 competed at the lower end of the luxury segment against models like the BMW 3 Series. In 2020, Tesla introduced the Model Y, a compact crossover SUV that in 2023 became the best-selling car in the world. The Tesla Cybertruck, a slight deviation from the company’s original path, finally began making its way to consumers in December 2023.

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It seems after a long journey that Tesla is getting close to achieving Musk’s master plan. The goal has always been a $25,000 electric vehicle, accessible to the average consumer. Aside from the goal price, not much has been known over the years about the next-gen car codenamed “Redwood.” Here is what we do know.

Tesla

Project Redwood, the consumer-friendly EV

Changing ambitions

According to earlier reporting from Reuters, before they reported the cancellation of the project, Redwood was slated to be a compact crossover. In the same earnings call mentioned above, Musk had explained that Tesla would leverage new technologies in Redwood’s manufacturing process, with the automaker first planning to produce the vehicle at its Austin, Texas Gigafactory.

“There’s a lot of — a lot of new technology, like, a tremendous amount of new, revolutionary manufacturing technology here… I am confident that once it is going, it will be head and shoulders above any other manufacturing technology that exists anywhere in the world, it’s next level,” he said.

As production ramps up Tesla would add production lines at other factories such as its Mexico location. Tesla had reportedly predicted a weekly production volume of 10,000 vehicles to start. One of Tesla’s long-term goals has been to create a fleet of robotaxis, based on the assumption that the company will eventually crack truly full self-driving. While it was thought that the $25,000 car would eventually serve as the platform for that project, the form factor and future of both projects is now less clear.

“I am confident that once it is going, it will be head and shoulders above any other manufacturing technology that exists anywhere in the world, it’s next level,” Elon Musk.

The next few years will prove to be an exciting time for EV’s as more manufacturers come on board and the race for a mass-market electric vehicle really heats up. Time will tell if Tesla’s Redwood will indeed begin production in 2025, or at all. In the meantime, the company faces renewed competition from companies like China’s BYD.