Tesla may be shifting strategy once again. Reuters reported that the company is working on a smaller and less expensive electric SUV. This would be a brand new vehicle rather than a variant of the existing Model 3 or Model Y, according to the publication’s sources. The new EV would allegedly be about 14 feet long, shorter than the 15.7-foot Model Y. Reuters didn’t have details about whether this would be an autonomous vehicle or a traditional one, but one source reportedly said that Tesla is generally looking to offer a driverless option in its vehicle lineup.
The company had previously been working on a budget EV with a target price of $25,000, but Tesla appeared to abandon that effort in 2024 to work on robotaxis. And as recently as the start of 2026, Tesla discontinued two of its EV models in order to refocus the business on robotics. Perhaps the brand felt it needed to have a bigger auto imprint after cutting the Model S and X and relaunched the budget EV project. Or perhaps this is just the latest whim of the company’s leadership and it won’t actually come to pass. We’ll have to wait and see.
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