Tesla reportedly plans to launch affordable crossover in 2025

Tesla CEO Elon Musk has announced plans for a next-generation platform that will allow the company to launch electric vehicles in 2022 that are smaller and less expensive than the Model 3 and Model Y. However, he has not announced a timeline.

Reuters reported on Wednesday, citing four people familiar with the matter, that Tesla has told suppliers that it hopes to begin production of vehicles based on the next-generation platform in mid-2025. Two of them described the vehicle, code-named "Redwood," as a compact crossover.

Musk has said that in 2020, Tesla's next-generation platform will allow the company to introduce vehicles starting at $25,000, but it is not clear if that is the same vehicle mentioned in the Reuters report.

Another source told Reuters that Tesla reverse-engineered the Honda Civic several years ago to study how to build an affordable car. The compact Honda starts at about $24,000.

The Model 3 is the most affordable Tesla currently on sale, with a base trim price of almost $40,000.

Musk has also previously stated that Tesla is planning at least two cars on the next-generation platform. At the CyberTruck launch last fall, Musk said that production of vehicles based on the next-generation platform will begin at a Tesla plant near Austin, Texas. A second production site could be a new plant in Mexico, which Tesla announced last year.

Tesla is beginning to face stiff competition from rival EV makers. There are a number of companies, especially in China, that offer EVs priced much lower than Tesla's prices. One of these companies is BYD, which sold 526,409 vehicles in the last quarter of 2023, compared to Tesla's 484,507, overtaking Tesla to become the world's top EV maker.