Tesla Innovates Affordable EV Following Model 2’s Cancellation

Tesla is reported to be working on a smaller and cheaper electric SUV. Sources briefed to Reuters say the car targets a price well below current Model 3 entry points.

Filmogaz.com notes that Tesla innovates affordable EV concepts after the Model 2’s cancellation. The move would mark a strategic reversal for the company.

Vehicle specifications

The compact SUV would measure about 4.28 meters in length. That is shorter than the Model Y’s 4.75 meters.

Weight is roughly 1.5 metric tons versus the Model Y’s two tons. Tesla plans a smaller battery pack to lower costs.

Production and pricing plans

Reuters sources say initial production would be in Shanghai. Three of four sources pointed to the Shanghai factory specifically.

The car aims for a price substantially under the Model 3’s $34,000 China starting price. The Model 3 begins around $37,000 in the U.S.

One source added Tesla hopes to expand manufacturing to the United States and Europe later. The project remains in early development stages.

Program status and timeline

Industry contacts could not confirm a final production approval. Reuters reported production is unlikely to begin in 2026.

Tesla did not provide a comment to Reuters. The program may not reach manufacturing until 2027 or later.

Strategic background

In 2024, CEO Elon Musk scrapped a $25,000 vehicle program known internally as NV9. He instead shifted company focus toward a Robotaxi initiative.

Senior executives had reportedly recommended continuing the affordable EV program. Internal analyses allegedly warned that Robotaxi economics would underperform.

Interim product moves

Tesla pursued lower-cost variants of existing models after NV9 ended. Those simplified Model 3 and Model Y versions faced repeated delays.

When they finally arrived in late 2025, starting prices were about $37,000 for the Model 3 and $40,000 for the Model Y. Those figures remained far above the original $25,000 target.

Sales trends and Robotaxi rollout

Tesla deliveries have trended downward since 2023. The company reported 1.81 million deliveries in 2023 and 1.79 million in 2024.

Deliveries fell to roughly 1.636 million in 2025. Q1 2026 deliveries were about 358,000, missing analyst forecasts.

The Robotaxi service launched in Austin in June 2025. It has operated only a small fleet, roughly eight unsupervised Model Ys in a limited geofence.

Regulatory filings show 15 crash incidents reported to NHTSA linked to that service. California regulators have said Tesla is not operating an autonomous vehicle service in the state.

Implications for the market

One Tesla employee described the new compact SUV as designed to be both driverless and human-driven. That suggests renewed emphasis on conventional driving options.

Competitors with low-cost EVs have gained ground while Tesla prioritized autonomy. Re-entering the affordable segment would aim to close that gap.

• Project reported to be an entirely new model, not a variant.
• Early development status makes timing uncertain.
• Target price intended to sit well below current Model 3 entry points.

Filmogaz.com will continue to follow developments as Reuters and other sources report further details. Any production schedule or final specs remain subject to change.