Shanghai — April 9, 2026, 22:03 CST
Tesla is working on a new, more affordable electric SUV, and it’s looking to start production in Shanghai, say four people with knowledge of the plans. Slotted beneath the Model 3 in price and smaller than the Model Y, the project has prompted Tesla to reach out to suppliers about parts and manufacturing, those people said. Tesla didn’t respond to requests for comment.
Timing is key here. Tesla cranked out 408,386 vehicles in the first quarter but only delivered 358,023—so production topped deliveries by over 50,000 cars. The company’s next results land April 22. With the $7,500 federal EV tax credit gone for some U.S. buyers and tougher rivals overseas, Tesla’s core car business, which still generates most of its revenue, is feeling the squeeze.
Shares slipped roughly 0.8% during Thursday’s U.S. session. That’s a mild drop, reflecting a market more focused on potential future products than last quarter’s delivery figures. As Hargreaves Lansdown’s Matt Britzman put it, “what is coming next” continues to dominate Tesla’s valuation. Reuters
China stands out as Tesla’s proving ground. Sales of Shanghai-built Model 3 and Model Y vehicles—including those shipped abroad—jumped 23.5% in the first quarter. Still, Tesla’s slice of the country’s EV market has edged down, while BYD has maintained fierce pressure both domestically and in Europe.
Europe isn’t moving in just one direction, despite what last year’s numbers hinted at. In March, Tesla registrations in Germany soared 315%, according to KBA data. BYD also posted a sharp increase, making it clear that the uptick comes as lower-priced Chinese brands, too, are racing ahead in the market.
Tesla hasn’t given up on robotaxis—its driverless ride-hailing push is still on. Cybercab output is still slated to start this month, but the automaker hasn’t filed for the U.S. exemption needed to sell cars without steering wheels or pedals. In Europe, regulators in the Netherlands are still weighing approval of Full Self-Driving Supervised, Tesla’s top-tier driver-assist tech. Over in Austin, Tesla’s robotaxi presence is still much thinner than what Waymo has built.
There are still plenty of risks. U.S. safety regulators wrapped up their probe this week into Tesla’s Actually Smart Summon after software revisions, but NHTSA’s engineering analysis targeting Full Self-Driving—covering roughly 3.2 million vehicles—remains active. Sources familiar with the new SUV project describe it as early-stage.
Views on the quarter are split. Seth Goldstein at Morningstar flagged the U.S. tax credit loss and the EU approval holdup, saying those factors will keep pressuring Tesla deliveries. Over at JPMorgan, Ryan Brinkman warned investors to tread carefully, pointing to rising inventory and a business plan that could take years to justify current valuations.
Tesla is also working to show it can grow its traditional car sales. Last week in Japan, country manager Richi Hashimoto told reporters the automaker aims to be the “number one imported car brand” as it rolls out more stores and service centers. Still, according to people with knowledge of the compact SUV project, production probably won’t kick off this year. Reuters
