Tesla to build new model, but South Africa is still off-limits for Elon's brand

Tesla is to start production of a new mass market electric vehicle (EV) code-named “Redwood” in mid-2025, according to people quoted by Reuters, with two of them describing the model as a compact crossover.

Tesla CEO Elon Musk has long whetted fans' and investors' appetites for affordable EVs and self-driving robotaxis expected to be made on next-generation, cheaper electric car platforms.

Those models, including an entry-level $25,000 (R474,799) car, would allow it to compete with cheaper petrol-powered cars and a growing number of inexpensive EVs such as those made by China's BYD.

BYD overtook Tesla as the world's top EV maker in the last quarter of 2023.

Musk promised to build a $25,000 car in 2020, a plan he later shelved and then revived. Tesla's cheapest offering, the Model 3 sedan, has a starting price of $38,990 (R740,252) in the US.

Tesla sent “requests for quotes,” or invitation for bids for the “Redwood” model to suppliers last year and forecast weekly production volume of 10,000 vehicles, the sources said, with production to begin in June 2025.

Tesla did not respond to a request for comment.

Timing of next-generation compact vehicles was one of the most voted questions by investors to Tesla before its quarterly results report on Wednesday, where it is expected to forecast a 21% rise in 2024 deliveries, well below the long-term annual target of 50% Musk set about three years ago.

Musk said in May Tesla was working on two new products with the potential for combined sales of 5-million vehicles a year. “The design of the products and manufacturing techniques are head and shoulders above anything else in the industry,” he said at Tesla's annual shareholder meeting.

Tesla plans to make an inexpensive robotaxi and an entry-level, $25,000 electric car based on the same vehicle architecture, according to Walter Isaacson's biography of Musk released in September, which includes interviews with the CEO and executives.

Musk said in 2022 Tesla would make a dedicated self-driving taxi with a futuristic look in 2024 after several misses at its goal of achieving full self-driving capability.

He and other Tesla executives laid out plans last March to halve the cost of its next-generation vehicles, but did not provide a time frame for the launches.

Musk has also ended speculation that Tesla might begin selling cars in South Africa. Replying to a question on his social media platform X last weekend, the South African-born CEO said high import duties were a barrier.

“Import duties are super high in South Africa to protect the domestic industry. Doesn’t make sense for Tesla, given that electric cars are not locally made,” he said in reply to Ziyaad Mahomed. 

His comments come in the wake of trade and industry minister Ebrahim Patel announcing last month import duties on EVs — which are higher than those on internal combustion engine (ICE) cars — would not be reduced in the short-term mainly because of load-shedding.

Tax and cashback incentives are offered to EV buyers in other countries to reduce the price gap between EV and ICE cars, but doing so in South Africa would lead to more EV sales which government believes is undesirable now because of Eskom’s woes and the small public charging infrastructure, said Patel.

“Bringing a lot of EVs onto the market now is probably not smart due to the grid challenges,” Patel said in a media briefing in Pretoria outlining government’s long awaited white paper on the EV roadmap.

His comments put paid to the motor industry’s hopes of boosting EV sales by making them more affordable. Imported ICE cars attract a duty of 18% compared to the 25% for EVs, which contributes to battery-powered vehicles carrying significant price premiums.