New Tesla Model 2: CEO Elon Musk reaffirms affordable, entry-level electric car will arrive in 2025
The baby Tesla, also referred to as as project ‘Redwood’, is scheduled to enter production in the first half of 2025
Tesla’s long awaited affordable, entry-level electric car – commonly referred to as the Tesla Model 2 – is on track to arrive in the first half of 2025. Tesla CEO, Elon Musk, reaffirmed this timeline during the company’s latest financial results call.
It’s possible we might get our first proper look at the eagerly anticipated EV very soon, as Musk said: “We postponed the Robotaxi product unveil by a couple of months to 10 October. This is because I wanted to make some important changes that I think will improve the Robotaxi – the main thing we’re going to show – and we’re also going to show off a couple of other things.”
“So moving it back a few months allowed us to improve the Robotaxi, as well as add in a couple of other things for the product unveil.”
The timing would make sense, as presentation slides for investors reveal that Tesla’s more affordable model will enter production in the first half of 2025. It’s set to utilise elements of the company’s next-generation platform with some from its existing architectures, and will be built on the same production lines as its current vehicle lineup.
Tesla admits this approach won’t allow for as much cost reduction as was previously predicted, but will enable the company to “Prudently grow our vehicle volumes in a more capex efficient manner during uncertain times”. Adding, “This should help us fully utilise our current expected maximum capacity of close to three million vehicles, enabling more than 50% growth over 2023 production before investing in new manufacturing lines”.
Pitched as a more affordable addition to Tesla’s four-strong model range, the Tesla Model 2 has been in the works for some time as the firm aims to lower the price of entry to its range of EVs below the base Model 3 that currently starts from £39,990 in the UK.
Tesla Model 2: exclusive images
Just one official teaser image of the new ‘baby Tesla’ has been released so far. It was shared in 2023 at an annual shareholder meeting, and shows the curving roofline of a car with similar design cues to those of the existing Model Y SUV and Model 3 saloon.
Our exclusive images interpret Tesla’s existing line-up and teaser images in a scaled-down format, to show how a baby Tesla Model 2 model could look. Judging by the single teaser image we’ve received and a video shared on social media showing some design sketches, the new car could borrow plenty of design language from the Model Y SUV. We also expect it will reflect the newly facelifted Model 3 with thinner headlights than Tesla’s older models.
The Model 2 should be positioned as a rival for conventional family hatchbacks, with a length of around 4.4 metres. That could be achieved through a more aggressive rear roofline, while still allowing a conventional bonnet with luggage space beneath it.
Despite speculation referring to the car as the Tesla Model 2, this badge is by no means guaranteed to be used – not least because Model 3 was chosen as a reverse of Model E, which Ford originally warned Tesla off using.
Musk has said “We’re going to take everything we learned from [Models] S, X, 3 and Y, the Cybertruck and the Semi into that platform. We’re trying to get to that 50 per cent number again.”
That’s a reference to the Model Y, which has bare construction costs significantly lower than the Model 3’s. Tesla used improved processes to cut huge amounts of complexity out of the Y; a fresh pair of larger stamped components in its bodyshell alone do the job of 171 separate parts in the Model 3, for example, saving more than 1,600 welds during manufacturing.
Tesla is expected to utilise its “revolutionary” new manufacturing process called ‘unboxed’ to build its entry-level EV, which is designed to be more efficient than current production lines and should be quicker too.
Tesla Model 2: pricing and rivals
Elon Musk told analysts in 2023 that the next-generation vehicle “Will be about half the cost of the Model 3 and Y platform”. But as we mentioned, Tesla doesn’t expect to reach that level of cost reduction.
Even so, the baby Tesla could still significantly undercut the starting price of a Model 3, which is currently £39,990. We predict the Model 2 could feasibly start at around the £30,000 mark.
That would open Tesla’s potential market up considerably, giving the company a rival for European-made electric hatchbacks such as the Volkswagen ID.3, and even Chinese models from the likes of MG and BYD. Considering the Model Y was not only the world’s best-selling EV but the most popular car full stop last year – with 1.23 million units sold – a cheaper alternative from Tesla itself will certainly have the potential to match that level of popularity.
In addition to the Model 2 being more affordable to buy, former Tesla CFO Zach Kirkhorn claimed the total cost of ownership for the company’s entry-level model per mile over five years will be significantly less than a base Model 3 or Toyota Corolla.
Tesla Model 2: battery technology
In 2023, Tesla’s now-former powertrain boss Colin Campbel revealed the new vehicle’s electric motor won’t use any rare earth materials and that the powertrain will be compatible with any battery chemistry, allowing for better flexibility for sourcing.
Tesla’s ability to make the new smaller car cheaply enough is all but certain to hinge on its choice of battery chemistry and how the cells are installed. The company has already used lithium-iron phosphate cells (LFP), which are cheaper to produce than nickel manganese cobalt (NMC).
The manufacturer is currently using LFP in some of its vehicles, and this is likely to form a key part of the cheaper model’s technical make-up – along with a novel installation. The firm is said to be preparing to roll out ‘cell-to-chassis’ technology on German-built Model Ys, as part of a tie-up with China’s BYD. Lighter and more compact than conventional module-based construction, this technique saves yet more space that can be used for additional cells to help redress LFP’s lower energy density and deliver comparable range.
Musk believes that Tesla can take its recently achieved three-million-cars milestone and expand it to a tally of more than 100 million vehicles on roads by the end of the decade. To achieve this, he says the firm will need “roughly a dozen factories”, and while the original plant in California is “just running out of room”, most of the facilities would be capable of making up to two million cars per year.
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