Cheapest Tesla yet one step closer

The upcoming small car from Tesla is well into development, and will initially be manufactured at the factory next to the US company's headquarters in Texas.

Tesla is yet to confirm arrival timing for the vehicle, however CEO Elon Musk told journalist and former engineer Sandy Munro in a YouTube video that development of the vehicle is "quite advanced".

Overseas reports have proposed a launch sometime in 2025.

However it may not be until 2026 or 2027 that it arrives in Australia because – as exclusively reported by Drive earlier this week – the Texas factory it will initially be produced in has not been configured to build right-hand-drive vehicles.

“We are working on a very low cost vehicle that will have a high volume … the revolution in manufacturing that will be represented by that car will blow people's minds," Mr Musk told Sandy Munro.

“It is not like any car production line that anyone's ever seen.”

Since 2020 Tesla has spoken of an entry-level electric car to be priced from about $US25,000 ($AU39,000), in line with petrol-powered small cars and SUVs from Japanese, South Korean and US manufacturers.

The cheapest Tesla currently on sale in the US is the Model 3, which starts at about $US40,000.

According to US vehicle price guide Kelley Blue Book, the average electric-vehicle transaction cost in the US fell from $US65,295 to $US50,683 between October 2022 and October 2023 – primarily due to aggressive price cuts rolled out by Tesla, which accounts for the majority of electric cars sold in the US.

However the figure is still about $US5000 more than the overall new-car average price.

Mr Musk told Munro the new vehicle will be first be built at the Texas Gigafactory, where the new Tesla Cybertruck is manufactured, before expanding to the company's upcoming factory in Mexico.

The top Tesla executive has previously said the cheaper electric vehicle has potential to sell “in excess of 5 million” examples each year, and it also appears production will not be limited to North America.

Preparations are reportedly underway for the entry-level Tesla at the company’s Giga Shanghai factory in China, according to Car News China, where the Model 3 and Model Y are built.

That will be critical to achieve the company’s goal of producing more than two million vehicles annually.

With a production capacity of 1.1 million cars per year, Tesla says the China plant sees a new Tesla roll off its production line every 37 seconds – more than twice as often as its Texas, USA factory’s 76 second performance.

A teaser of its new entry-level Tesla was issued in April 2023.