It won't just be sold in China after all.
Right now, Tesla's cheapest car on sale is the Model 3 with a starting price of $37,990 for the Standard Range Plus model. A cheaper Standard trim was sold for $35,000 but was discontinued last year due to a lack in demand.
However, an even cheaper $25,000 compact Tesla aimed at the mass market has been in the pipeline for several years now. Back in 2018, Elon Musk said he wanted to launch a $25,000 car in three years when battery technology would be improved and EV manufacturing costs reduced. Three years later in 2021, Tesla still doesn't sell an affordable $25,000 car slotting below the Model 3 and Model Y.
This topic was brought up by China's state media channel Xinhua Net in an interview with Tesla China President Tom Zhu, who confirmed Tesla's cheap compact car will be designed at a research center at Tesla's Gigafcatory in Shanghai.
Zhu also confirmed Tesla's new entry-level model will be built in China. While it will primarily be aimed at the Chinese market where small electric cars are extremely popular, Zhu confirmed the $25,000 electric car will be sold globally so it will be available in the US. This will fill the void of small EVs in America since models like the Volkswagen ID.3 and Honda e aren't sold here.
Tesla is currently constructing the dedicated Research and Development center that will design, engineer, develop, and test the upcoming compact car. This will be the first Tesla R&D center in China and the first outside the US. Zhu added that Tesla China aims to "design, develop and produce" its own original Tesla car that appeals to global markets.
As for the design, the new compact electric car is expected to have a hatchback body style and share the same platform as the Model 3. While it likely won't launch for a few years until Tesla can manufacture cheaper batteries, road testing of the automaker's new compact car could start later this year.