Tesla Prepares For New Mass-Market EV Codenamed “Redwood”

At the opening of the US cash market, Tesla shares were marginally higher following a Reuters report that the company is in talks with suppliers regarding a mass-market electric vehicle, codenamed “Redwood,” set for a mid-2025 release. 

Sources familiar with the new mass-market EV said it’s described as a “compact crossover” and will compete with cheaper petrol-powered cars and inexpensive Chinese EVs, such as those made by BYD. 

Tesla founder Elon Musk has teased over the years with a $25,000 mass-market model. At the moment, the cheapest offering by Tesla is the base Model 3 sedan, starting at $38,990 in the US. 

Sources said Tesla engineers sent “requests for quotes” to suppliers for the Redwood last year. One weekly forecast shows production volumes of upwards of 10,000 vehicles per week. They noted production would begin as soon as June 2025. 

Timing of the mass market EV comes as BYD displaced Tesla as the world’s biggest maker of EVs in the fourth quarter. 

Sales of overall EVs are sliding due to elevated interest rates. Also, prices of used Teslas are plunging. 

Tesla is scheduled to report fourth-quarter earnings after hours today. Earnings estimates point to $25.8 billion in revenue and an Earnings Per Share of $0.74. Tesla’s gross margin rate is projected to be 18.1%, compared to 17.9% in the third quarter and 16.0% in the same period last year. The company’s free cash flow for the quarter is expected to be around $1.45 billion.

Ahead of earnings, Adam Sarhan, founder and CEO of 50 Park Investments, told Bloomberg:

“Tesla investors are looking for a bullish catalyst, but there isn’t one in sight. 

“Investors are going to pay these multiples for earnings for only so long, and if the fundamental story changes and earnings get compressed, then valuation gets compressed.”

The mass market electric vehicle might be the bullish catalyst for the market.