Tesla Plans Affordable Entry-Level SUV Below Model Y, May Expand to India

Tesla is developing a new entry-level SUV that will sit below the Model Y and cost less than the Model 3 sedan, according to a Reuters report citing four sources familiar with the matter. The Model 3 currently starts at 37,000 dollars, or Rs 34.31 lakh for the US-spec version. Tesla has reportedly contacted suppliers in recent weeks to discuss the new SUV, which will be an entirely new model and not a variant of the Model Y.

Key Highlights

• Tesla developing new entry-level SUV to be priced below Model 3
• New SUV will be produced in Shanghai before expanding to US and Europe
• Vehicle will use a smaller battery and single electric motor to reduce costs
• Tesla may introduce the new model in India as it expands its Supercharger network

New SUV Details and Production Plans

The upcoming SUV will measure around 4.3 metres in length, making it a midsize vehicle. For comparison, the Model Y ranges from 4,790mm to 4,976mm depending on the wheelbase. Production of the new SUV will begin at Tesla's Shanghai factory in China, with plans to expand manufacturing to the US and Europe later.

To reduce costs, Tesla aims to use a smaller battery, which may result in a shorter driving range than the Model Y. The vehicle will likely feature a single electric motor instead of two, according to one source. Tesla also plans to make the SUV lighter, targeting a weight of about 1.5 metric tons or 1,500kg. The timeline for a global debut remains unclear, and production is unlikely to start this year.

Strategic Shifts and Market Context

This development comes after Tesla discontinued the Model S sedan and Model X SUV, its two longest-running models, to focus on large-scale humanoid robot production. Earlier in 2024, CEO Elon Musk cancelled plans for the low-cost Model 2 EV and shifted focus to autonomous robotaxis. Tesla is preparing to produce its two-door Cybercab robotaxi, first shown in 2024, which lacks a steering wheel and pedals. However, there is no confirmed debut date for the Cybercab.

Sources indicate Tesla now wants to develop vehicles capable of autonomous operation while still allowing human driving. While the company continues to pursue fully driverless cars, most global markets have not widely adopted this technology. Offering both autonomous and manual driving options could help Tesla maintain high production volumes and appeal to more buyers. This approach would mark a shift from Tesla’s previous strategy, which focused on robotaxis and pared-down versions of existing models rather than all-new vehicles.

Potential Impact in India

In India, the Model Y is Tesla’s only offering, priced at Rs 58.89 lakh for the rear-wheel-drive version and Rs 67.89 lakh for the long-range variant, both ex-showroom. The midsize electric SUV segment in India has seen new launches such as the Maruti e Vitara, Hyundai Creta Electric, Vinfast VF6, and Mahindra BE 6. If Tesla proceeds with the new SUV, it could consider introducing it in India to expand its lineup.

Tesla is also building its Supercharger network in India. The company recently opened its fifth station in Navi Mumbai, bringing the total to around 20 chargers nationwide. More installations are planned, especially along major routes connecting cities like Bengaluru, Chennai, and Chandigarh.