Tesla Model 2 back on the menu? Tesla races to develop small SUV to cash in on demand for affordable EVs

Tesla is reportedly rushing to introduce a smaller, cheaper all-electric SUV for Chinese buyers that has been designed to undercut both the Model 3 sedan and mid-size global best-selling Model Y. 

Despite CEO Elon Musk publicly announcing that the US EV pioneer was switching its focus to produce robotaxis, humanoid robots and further artificial intelligence, according to Reuters, behind the scenes a new electric car is in the works.

Created to be smaller, lighter and significantly cheaper than the Model Y, instead of modifying the current six-year-old SUV, sources told the respected newswire that designers and engineers have been forced to start from scratch and that the inbound Tesla would be entirely new.

Said to be in the early stages of development, suppliers have reportedly already been contacted about parts and production techniques that would be used to build the compact SUV.

Since Tesla does not build vehicles for specific regions, once production has been established at the firm’s Shanghai plant, the new all-electric SUV will be built both in Europe and the US.

Tesla has not yet responded to the claims that it has begun developing a new EV, but early reports suggest it will share a footprint with compact SUVs like the Mazda CX-3, measuring at 4280mm long, or around 500mm shorter than a Model Y.

Insiders suggest to ensure it delivers class-leading efficiency, the new Tesla will weigh less than 1500kg – around 500kg lighter than a Model Y.

With less weight, Tesla can use a smaller battery and a single electric motor while delivering a competitive range and acceptable performance.

Set to slip into the line-up in the space where the stillborn Model 2 hatch/ Model Q SUV were supposed to inhabit, it is thought in the US the new unnamed Tesla could be priced below US$25,000 (A$35,400).

Confusingly, outspoken Musk made comments just last year that any $25,000 EV you had to drive yourself was “silly” and “pointless” during an earnings call to investors and that making a budget Tesla was both unnecessary and irrelevant.

It is not known what has changed the US car-maker’s boss’ mind, other than pressure from the Chinese business.

Sharing the high cost of an all-new model, it is thought the new platform and lightweight cost-efficient powertrain might be shared with the production version of the inbound Cybercab autonomous taxi that Tesla is already well under way on developing.