Tesla small car firming for 2025

The first of two new smaller and cheaper Tesla electric cars could be in US showrooms less than two years from now, unsubstantiated reports out of China claim.

Tesla has previously announced its pair of smaller and more affordable "next-generation" vehicles is due in the "next couple of years", built at a new factory in Mexico set to debut new cost-saving production processes.

A new, unverified report from Chinese technology news outlet LatePost (via social-media website Weixin.qq) claims Tesla is preparing to commence production in Mexico in the first quarter of 2025 (January to March) – pending any delays.

Tesla is reportedly enticing Chinese companies that supply parts to its factory in Shanghai – where Australian Teslas are made – to build a factory in Mexico to supply the US electric-car specialist's new plant in Mexico's Nuevo Leon region.

According to the Chinese news outlet, Tesla has asked suppliers to be "ready for production in the first quarter of 2025".

It is unclear how long after production starts in Mexico the first examples would arrive in Australia.

Initial production of new Tesla vehicles traditionally focuses on left-hand-drive countries before right-hand-drive production is added a year or two later.

The publication alleges this is three to six months later than anticipated, as "people close to Tesla's suppliers" claim Tesla has "underestimated the difficulty of building a factory in Mexico."

LatePost reports Tesla has threatened to withdraw existing contracts with Chinese suppliers to produce parts for its US factories in California and Texas, if they do not build a plant in Mexico to supply Tesla's next factory.

According to LatePost, more than 20 Chinese companies which already build components for Tesla vehicles currently have a factory in Mexico, or have announced plans to build one.

Mexico is a hub for car production in North America, with facilities building vehicles for Toyota, Ford, Volkswagen, Kia, Mazda, Nissan, Honda, and luxury brands Mercedes-Benz, BMW and Audi elsewhere in the country.

General Motors utes and SUVs, Ram pick-ups, and Kia small cars are built within 100km of the proposed site of the Tesla factory.

According to the Chinese news outlet, 95 per cent of the parts used for Chinese-made Tesla Model 3 electric cars are produced in China.

The US electric-car maker has reportedly localised its component suppliers within a few hundred kilometres of its factory to reduce the need for large warehouses to store parts, reducing costs.

LatePost claims it has been told by one Tesla part supplier that manufacturing costs are 15 per cent higher in Mexico than in China – but Tesla is prepared to buy components 18 to 20 per cent more than the Chinese price, which is meant to entice Chinese companies to Mexico.

As previously reported by Drive, Tesla's "next-generation" vehicle range will spawn two models, which will be smaller and more affordable than today's Model 3 sedan and Model Y SUV.

Tesla CEO Elon Musk has estimated the company could sell "in excess of five million" examples of both vehicles once production has ramped up. For context, Tesla produced 1.3 million Model 3 and Model Y vehicles combined last year, according to its financial reports.

The US car maker has confirmed the new models are planned to cost half as much to build as a Model 3, thanks to innovative new production process, and the vehicles' smaller battery packs.

Rather than assembling the body of a vehicle first – and fitting the interior and battery further down the production line – Tesla says sections of the vehicle (front, rear, sides and interior) will be put together as complete assemblies first, before bringing them together at the end of the line to finish the car.

The company has shared few other details about the new models, and is yet to disclose how much they will cost, how big they will be, what body shapes they will be, and any specifications.

Specifications published in a company document suggest the new Tesla models may be fitted with a 53kWh battery pack – which due to their smaller dimensions could still deliver more than 500km of driving range – but specifics are yet to be locked in.

This battery could use lithium iron phosphate (LFP) technology, as seen in the base-model Tesla Model 3 and Model Y Rear-Wheel Drive in Australia.

In 2020, Mr Musk announced a targeted starting price of $US25,000 ($AU37,800) for a new small electric car from the company.

However it is unclear if Tesla is still on track to hit this figure, as manufacturing costs have risen sharply since the target was announced in late 2020 – and there has been rapid currency inflation.

The Tesla Model 3 is currently priced from $US40,240 ($AU59,935) in the US, or $61,300 plus on-road costs in Australia.

For everything else we know so far about the new compact Tesla, click the links below.

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