According to Reuters, four sources with insider knowledge have disclosed that Tesla is in the process of developing a brand-new compact electric SUV. This upcoming model is set to be more compact and budget-friendly. Over recent weeks, Tesla has engaged in discussions with suppliers regarding the manufacturing process and component specifications for this vehicle. It's important to note that this SUV will be an entirely novel design, not a modified version of the existing Model 3 or Model Y.

Three of the sources indicated that the vehicle will initially be produced in China, with the potential for future expansion into the United States and European markets. The SUV will measure 4.28 meters in length, making it notably shorter than the Model Y, which stands at 4.78 meters. Additionally, two sources revealed that Tesla intends to price this new vehicle below the entry-level Model 3. For context, the Model 3's starting price is approximately $34,000 in China and around $37,000 in the United States.

In a bid to cut costs, Tesla plans to incorporate smaller-capacity batteries into the new SUV. This decision will result in a driving range that falls short of the Model Y's impressive 306 to 327 miles. Furthermore, the vehicle will feature a single motor instead of a dual-motor configuration, aiming to achieve a body weight of roughly 1.5 metric tons. This is a significant reduction compared to the Model Y's weight, which hovers around 2 metric tons.

Three sources confirmed that the new vehicle will be manufactured at Tesla's Shanghai factory. However, the exact timeline for production remains uncertain, with a slim chance of production commencing within the current year. All four sources underscored that the project is still in its nascent stages of development. As such, it is unclear whether Tesla has given the official green light for the model to enter production.