Tesla, the world’s leading electric vehicle (EV) maker, has confirmed that it will launch a new mass market EV codenamed “Redwood” in the second half of 2025. The company’s CEO, Elon Musk, revealed some intriguing details about the next-gen vehicle and its manufacturing process during the fourth quarter earnings call on January 25, 2024.
Musk emphasized that the next-gen vehicle will not only have a stunning design, but also a revolutionary manufacturing system that will be far more advanced than any other automotive manufacturing system in the world by a significant margin. He said, “This is a revolutionary manufacturing system significantly, far more advanced than any other automotive manufacturing system in the world by a significant margin. It’s next level.”
Musk added that the manufacturing system will be very hard to copy, as it involves specialized machines that make the machine that make the machine. He said, “You have to copy the machine that makes the machine that makes the machine… manufacturing inception.”
The first manufacturing location for the “Redwood” will be Tesla’s Gigafactory and headquarters in Austin, Texas. The new platform was originally set for Mexico, but Musk explained that moving locations was strategic, as the engineers need to live on the line to ensure the smooth operation of the new technology. He said, “The reason I wanted to put this new revolutionary manufacturing line at Giga Texas was because we need the engineers to be living on the line. This is not sort of off the shelf, just works type of thing. And it’s just a lot easier for Tesla engineering to live online if it’s in Austin versus elsewhere.”
Following Austin, the second production site is planned in Mexico, with a third location outside North America being considered for identification by late this year or early next.
A Next-Gen Low-Cost EV
The next-gen vehicle, which is expected to be a compact crossover, will be Tesla’s most affordable and accessible EV yet. Musk said that the company is optimistic that it will start production towards the end of 2025, sometime in the second half. He also said that the company will be sleeping on the line practically to get it produced.
The next-gen vehicle will be part of Tesla’s second growth wave, as the company anticipates a surge in demand for its EVs in the coming years. Musk said that the company achieved a record production and deliveries of over 1.8 million vehicles in 2023, in line with its official guidance. He also said that in Q4, the company was producing vehicles at an annualized run rate of almost 2 million cars a year.
However, he also warned the shareholders of notably lower sales growth for 2024, as the wave of Model 3 and Model Y sales subsides. He said that the company expects a second sales wave that will start with the next-gen vehicles coming in 2025.
A Leader in Full Self-Driving Technology
Musk also touched on Tesla’s progress in full self-driving (FSD) technology, which is one of the company’s key competitive advantages in the EV industry. He said that the company is constantly improving its FSD software and hardware, and that other car companies should be asking for FSD licenses. He said that the reasons will become obvious probably this year.
Musk has been known for his ambitious and optimistic predictions for FSD, and has claimed that Tesla will achieve Level 5 autonomy, which means the vehicle can drive itself in any condition, without human intervention. However, Tesla’s FSD is currently at Level 2, which means the driver still needs to pay attention and intervene when necessary. Meanwhile, rival Mercedes-Benz has recently gained Level 3 approval in the US, which means the vehicle can drive itself in certain conditions, such as highways, with the driver ready to take over when needed.
Musk admitted that his production forecast should be taken with a grain of salt, as he is often optimistic regarding time. He said, “Our current schedule shows that we will start production towards the end of 2025. So sometime in the second half. That’s just what our current schedule says. But there’s a lot of new technology like a tremendous amount of new revolutionary manufacturing technology here.”
He was accurate when he said the Model 3 would arrive in 2017, but was very wrong about the $35,000 price (it debuted at just under $50K and Tesla only briefly sold a $35K model). If that history holds, the next-gen model may arrive on time, but it may take some time for the price to come down.