Elon Musk-led Tesla Inc. (NASDAQ:TSLA) is reportedly planning on developing and introducing an affordable, compact electric vehicle in its lineup.
New Affordable Tesla?
The EV giant is reportedly in talks with its suppliers to source materials for the EV, which could be about 14 feet in length, significantly smaller than the Model Y, Reuters reported on Thursday, citing anonymous sources.
The report also said that the compact SUV would be produced in China and Musk also plans to introduce it in the U.S. and Europe.
Tesla did not immediately respond to Benzinga‘s request for comment.
The newer model would be priced lower than the Model 3, and may use a smaller battery pack while also being lighter, all of which could help the company price the SUV competitively. It’s worth noting that Tesla had reportedly scrapped plans to develop an affordable EV earlier to focus on robotics and self-driving.
While still in developmental stages, the product could mark Tesla’s focus on human-driven vehicles again, as the sources cited in the report said the company anticipates slower adoption of self-driving vehicles across several countries in the world. There is no set timeline for the product’s production.
2 New Tesla Models?
The news comes as there is considerable buzz surrounding a possible new model for Tesla. However, the model appears to be different than the one reported on by Reuters. Two new models in the company’s offering could help Tesla freshen up its product line.
Musk had recently teased a possible 7-seater layout for the upcoming vehicle after a frame was spotted uncovered at Tesla’s Gigafactory in Texas. The new model’s frame bears some resemblance to the Model Y from the front, but has enhanced space in the rear and cutouts for large windows.
Talks of a new vehicle in the Tesla lineup could help the company rejig its models and give customers more choice. It could also increase footfall in showrooms as the automaker’s aging lineup, comprising the Model Y, Model 3 and the Cybertruck, could deter customers due to its lack of updates.
Model S And X Selling Out, Cybercab Plans
The EV giant also sunset the Model S and Model X vehicles from its lineup, as announced by Musk during the company’s Q4 2025 earnings call earlier this year. Musk also recently said that the inventory of the Model S and X was running out, urging customers to get their hands on the remaining models as production officially ended this month.
Tesla is also working on the Cybercab, which Musk said would be available for a price tag of $30,000 or less and feature no steering wheel or pedals on offer. The production of the Cybercab was going to begin this month.
Tesla Deliveries, Sales
Newer models could also help the company boost its sales, as Morgan Stanley analyst Andrew Percoco predicted that the automaker would deliver over 1.6 million units in 2026. However, Q1 2026 delivery figures showed that Tesla sales fell short of market expectations.
The EV giant delivered more than 358,000 vehicles worldwide and produced over 408,000 units in the first quarter of the year. It’s worth noting that the gap between units sold and units produced illustrated a surplus of more than 50,000 Tesla vehicles sitting unsold in the company’s lots, a new record that exceeded Q1 2024’s figure of 46,500 units.
According to Benzinga Edge Rankings, Tesla offers satisfactory Growth, but fails to provide a favorable price trend in the short, medium, and long term.
Price Action: TSLA fell 0.48% to $345.00 during pre-market trading on Thursday.
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