Insiders say Tesla is secretly developing a lightweight, affordable electric car

TSL is getting ready to launch a brand-new electric vehicle R&D program. Four people familiar with the matter told Reuters that TSL is developing a compact, low-cost electric car, with body specs that are smaller than the Model Y. It will be an entirely new model, not a derivative of TSL’s existing Model 3 or Model Y. They also said that TSL has discussed with suppliers manufacturing processes and the specifications of various parts.

TSL new model specifications

According to information provided by four people familiar with the matter, TSL has recently started contacting suppliers to discuss part specifications and manufacturing processes for a new EV code-named but not yet disclosed. This model is not a derivative of the existing Model 3 or Model Y, but an independent product plan. Initial specifications show that the new car’s length is about 4.28 meters (about 14 feet). Compared with TSL’s current best-selling Model Y (about 4.75 meters), that is significantly shorter, and the product positioning is more geared toward city commuting needs.

In terms of production locations, the reports indicate that the Shanghai plant will be the main production site for this model. However, some sources also say that TSL is considering expanding production lines to the United States and Europe to meet demand across different regions. Although R&D is in an early stage, the specific mass-production timeline remains unclear. The odds of large-scale production before the end of 2026 are considered low. The launch of this model is intended to help fill the gap TSL has in the affordable electric vehicle market.

At present, the Model 3 in the U.S. starts at about $37,000. To bring the selling price below the Model 3, TSL plans to lower costs through a range of hardware changes. People familiar with the matter said the new model will use a smaller battery pack, with an expected driving range below the 490 to 520 kilometer range of the Model Y. In addition, the new car may offer only a single MDA configuration, dropping the dual-MDA all-wheel-drive system to simplify the powertrain and reduce weight.

Lightweighting is the main objective of this plan. TSL aims to keep the new car’s weight at around 1.5 tons, which is a clear reduction compared with the Model Y, whose weight is close to 2 tons. This design approach not only helps improve battery efficiency, but also lowers material costs during the manufacturing process. However, TSL has previously had multiple records of concept cars being followed by delayed mass production—for example, the Roadster unveiled in 2017 and the Semi truck that has not yet entered full-scale production. As a result, uncertainty still remains around the final launch schedule of this budget-friendly vehicle.

TSL shifts its autonomous-driving vehicle strategy

Although CEO Musk has publicly claimed that developing an affordable auto-driving car lacks necessity and that the focus should shift to driverless ride-hailing taxis (Cybercab) and humanoid robots, internal reports show that TSL’s product strategy is undergoing changes. Employees said that the current R&D direction is toward building vehicles that combine driverless capability with an interface for human driving, to comply with legal requirements in different regions.

The main reason for this shift is that regulatory recognition of fully autonomous driving (FSD) progresses at different speeds across global markets. If TSL were to produce only vehicles without pedals and a steering wheel, it would face stringent regulatory restrictions and would be difficult to roll out globally. Keeping traditional driving control systems for certain vehicle models can ensure that factory production lines remain operating close to full capacity. Until driverless technology is fully mature, supporting the company’s financial performance through sales in the mass market can help sustain results.

TSL is currently facing the challenge of slowing growth in traditional electric vehicle sales, along with intensifying competition from low-cost electric cars produced by Asian manufacturers. Even though Musk has emphasized multiple times that driverless driving is the key to boosting the company’s market value, analysts noted that traditional electric vehicles are still the company’s main revenue source. As of April 2026, while TSL’s market value remains at a high level, the market still seems to be watching and waiting over whether it can roll out truly “affordable” products. TSL has not responded to requests for comment regarding the new model plan.

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