Tesla’s long-teased $25,000 electric car appears back on track, with reports indicating the company will restart construction Shanghai Gigafactory third phase dedicated to mass production of the budget EV. Initially hinted at in 2020 and positioned as critical to Tesla’s 20 million annual vehicle target in 2030, the ultra-affordable model looked mired in uncertainty until now, (Elon Musk: Tesla’s budget EV features revolutionized production).
With phase one and two of Giga Shanghai focused on premium models like the Model 3 and Model Y, phase three would allow Tesla to leverage its cost-effective Chinese supply chain and manufacturing expertise to launch a no-frills EV for the masses. This subcompact would open Tesla up to a vast new demographic in China’s rapidly electrifying automotive market.
And Tesla is mobilizing quickly to make it happen – sources say after pausing activity over the past year, Tesla’s construction team is back on the job preparing the facilities and production lines necessary to manufacture the $25k car out of Shanghai Gigafactory phase three. This renewed urgency around the budget EV highlights Tesla’s product planning flexibility even amid recent economic uncertainties.
The ability to scale Shanghai operations also provides Tesla with geographic manufacturing redundancy as the subcompact car rolls out. Giga Texas would be poised as the leading global production hub, supplemented by made-in-China models and Giga Berlin and Giga Mexico (2026).
Few automakers can rival the vertical integration and manufacturing bandwidth Tesla continues constructing worldwide, with the Model 3 and Model Y serving more premium segments, Tesla’s cost curve mastery with the $25,000 EV would be a game-changer.
Renderings depict a ultra-compact, almost cartoonish wedge shape that maximizes interior space on a tiny footprint – perfect for dense urban regions where parking real estate is at a premium. And cooled seats, keyless access, autonomous driving, and other features hint that Tesla won’t completely strip the fun from its budget offering.
Of course, Tesla must still deliver – delays plagued the prior roadmap for this EV. But with CEO Elon Musk labeling a smaller, cheaper Tesla as “critical”, all signs point to the company prioritizing Shanghai phase 3 and accelerating the car’s path to market. Even in a turbulent economy, affordable EVs accessing a wider demographic seem resilient – and Tesla looks to leverage that demand in China first before expanding globally. From deferred dream to production reality, the $25,000 EV is regenerating remarkable momentum.