During the earnings call, Tesla CEO Elon Musk said that 2025 will be the “biggest year in Tesla’s history” and promised to roll out more affordable models in the first half of 2025.

The new model will use some of the structure/components of the current Model 3 and Model Y platforms and undercut both entry-levels in terms of pricing.

Using parts of its next-gen and current platforms at existing production lines will achieve less cost reduction than previously anticipated but will enable Tesla to scale vehicle volumes in a capex efficient way through uncertain times.

The new car may be the previously rumored Model Q or “Redwood” in early December 2024, which was believed to be priced at only 140,000 CNY (less than 20,000 USD) for the Shanghai Gigafactory version.

Source: Global Times

We note that the “Model Q” moniker was born from a reportedly leaked Deutsche Bank report suggesting that a sub-30,000 USD after tax credits (7,500 USD) Tesla will come to America and is expected to boost sales by 20% to 30%.

However, we now know that President Donald Trump will aim to cancel the program.

The new vehicle will reportedly measure less than 4 meters long (Model 3 is 4,694 mm long), 30% lighter than the Model 3 and will equip a 25% smaller electric battery.

The Model Q will also reportedly be a compact sedan, almost like a scaled down Model 3 with a sportier rear styling.

The battery will use lithium iron phosphate with 53 kWh or 75 kWh configurations.

The “Model Q” will likely offer over 500 kilometers in CLTC range and be made available in two variants, two-wheel drive and four-wheel drive.

The announcement of this more “affordable” model on the call comes as a surprise to many, especially considering that Musk himself poured cold water over the idea “Basically, having a regular 25,000 USD model is pointless. It would be silly. It would be completely at odds with what we believe,”

Source: Tesla

Instead, he seems much more excited for the Cybercab, the long-awaited robotaxi that he predicts will be made available by 2027.

Musk did affirm that the Cybercab will be priced under 30,000 USD and charged wireless via induction.

Tesla released the much anticipated Model Y “Juniper” less than three weeks ago on January 10, 2025 and is already creating buzz in the market for more affordable models.

While we still don’t know when we will have a sub-30,000 USD Tesla vehicle, Musk did highlight a major milestone that for the first time, Tesla has reduced the average cost of manufacturing its vehicles to below 35,000 USD.