Tesla developing smaller, cheaper SUV?

Tesla could be developing a new smaller, lower-cost electric SUV, according to latest sources.

Reuters reports the model is in early development, with the company recently contacting suppliers to discuss manufacturing processes and component specifications.

The proposed vehicle is understood to be an all-new model rather than a variant of the existing Model 3 or Model Y, according to people familiar with the matter.

Sources told Reuters the compact SUV would be around 4.28 metres in length (much shorter than the Model Y at around 4.79m), and is expected to be built in China, with potential plans to expand production to the United States and Europe.

The development comes after Tesla chief executive Elon Musk scrapped a previously anticipated low-cost EV project in 2024 as the company shifted focus towards robotaxis and humanoid robots.

The company is said to recognise that widespread adoption and regulatory approval of fully autonomous vehicles may take years in many markets, meaning dual-purpose vehicles could help sustain sales and factory utilisation.