Tesla (TSLA, Financials) is making a smaller, cheaper electric SUV. This could mean that the business is changing its approach after focusing a lot on AI and robots in the past few years.
Tesla is said to have started talking to vendors about design and manufacturing aspects, even though the project is still in its early phases. The intended car would be a separate model, smaller than the Model Y and cheaper than the Model 3, which is Tesla’s lowest-priced car right now.
The new SUV might help Tesla reach more customers, especially in regions where price is important, if it goes ahead. At first, production will likely be focused on China, but it could subsequently move to the U.S. and Europe.
The timing is interesting. Tesla has already put its plans for a low-cost electric vehicle on hold to work on robot taxis and humanoid robots instead. This new endeavor makes it seem like the firm is going back to its roots in making electric cars for the mass market, while still keeping its long-term plans for self-driving cars in mind.
For investors, this concept brings up a classic issue in Tesla’s story: how to balance innovation that looks to the future with growth in its main car business in the short term. The next thing that will happen is whether the project proceeds from early planning to confirmed production.