TLDR
- Tesla is developing a new compact SUV, shorter and cheaper than the Model Y, according to Reuters sources.
- The car would be ~4.28 meters long, built primarily in China, with potential expansion to the US and Europe.
- Tesla’s vehicle sales have fallen for two straight years — from 1.81 million in 2023 to 1.64 million in 2025.
- TSLA stock is down ~24% year to date and on pace for its eighth straight weekly decline.
- The project is in early development; production is unlikely to start in 2025, and Tesla has not confirmed the plans.
Tesla is reportedly working on an all-new compact SUV — smaller and cheaper than the Model Y — in what could be its first entirely new passenger vehicle since 2020.
📢 𝐉𝐔𝐒𝐓 𝐈𝐍: $TSLA Tesla Developing Smaller, Cheaper Electric SUV – Reuters
👉 𝐊𝐞𝐲 𝐇𝐢𝐠𝐡𝐥𝐢𝐠𝐡𝐭𝐬:
➤ Tesla working on new 𝐜𝐨𝐦𝐩𝐚𝐜𝐭, low-cost electric SUV.
➤ Vehicle expected to be ~𝟒.𝟐𝟖𝐦 long, smaller than Model Y.
➤ Initial production likely in… pic.twitter.com/sh4w5ct7PM
— Hardik Shah (@AIStockSavvy) April 9, 2026
Four people familiar with the matter told Reuters that Tesla has already contacted suppliers to discuss manufacturing details and component specs. The car would measure roughly 4.28 meters (about 14 feet), compared to the Model Y’s 15.7 feet.
Three sources said production would be based at Tesla’s Shanghai factory. One source added that Tesla also plans to eventually expand output to the US and Europe. Tesla did not respond to requests for comment.
The new model would target a price below the entry-level Model 3, which currently starts at around $37,000 in the US and $34,000 in China. To hit that price point, Tesla plans to use a smaller battery, a single motor, and cut the vehicle weight to around 1.5 metric tons — about 25% lighter than the Model Y.
That smaller battery would mean a shorter driving range than the Model Y’s 306–327 miles. The trade-off is a lower sticker price that could open the door to buyers currently priced out of the Tesla lineup.
A Strategy Shift — or Just a Pivot Back?
This comes after Musk scrapped the much-hyped “Model 2” project in 2024, redirecting resources toward robotaxis and humanoid robots. At the time, Musk called a $25,000 human-driven EV “pointless.” This new SUV raises the question of whether Tesla is quietly reversing that call.
One source said Tesla now aims to build models that are driverless by default but retain a human-driven option. That dual-purpose approach could help Tesla sell more cars in markets where full autonomy isn’t yet legal or widely accepted.
The project is still early-stage. Reuters could not confirm whether Tesla has officially greenlit production. Given Tesla’s history — the Roadster and Semi were both shown as concepts in 2017 and still haven’t fully materialized — investors have reason to stay cautious.
Sales Have Been Sliding
Tesla’s vehicle numbers tell the story clearly. Sales came in at 1.81 million in 2023, dipped to 1.79 million in 2024, and dropped further to 1.64 million in 2025. Analysts expect a modest recovery to 1.72 million this year, per FactSet.
The stripped-down “standard” versions of the Model 3 and Y, launched last fall at $36,990 and $39,990 respectively, haven’t moved the needle in any meaningful way.
TSLA is down about 24% year to date and more than 30% from its 52-week high near $500 in December. The stock is on pace for eight straight weeks of losses.
The Cybercab robotaxi, unveiled as a concept in 2024, is said to be entering production this month — but Tesla has yet to seek the federal exemption needed to sell a car with no steering wheel or pedals.
🚨 Our April Stock Picks Are Live!
A new month means new opportunities. Our analysts have just released their top stock picks for April, highlighting companies with strong momentum that rank highly on our KO Score algorithm. We’re also now sharing trade ideas for both long-term and short-term investors, giving you more ways to spot potential opportunities in the market.
Sign up to Knockout Stocks today and get 50% off to unlock the full list and see which stocks made the cut.
Use coupon code Special50 for your exclusive discount!
Get 3 Free Stock Ebooks
Discover top-performing stocks in AI, Crypto, and Technology with expert analysis.
- Top 10 AI Stocks - Leading AI companies
- Top 10 Crypto Stocks - Blockchain leaders
- Top 10 Tech Stocks - Tech giants
