The EV world lit up with speculation yesterday after reports emerged from China stating that Tesla, and specifically its Head of Investor Relations, Travis Axelrod, had confirmed plans for a new lower-cost EV set to debut next year during a Deutsche Bank meeting in NYC on Monday.

Predictably, the rumor mill began grinding away. To separate fact from fiction, we obtained a copy of Deutsche Bank’s report summarizing the meeting. While the report offers some clarity on Tesla’s ambitions, it stops short of providing concrete details, leaving plenty of room for speculation about what’s to come.

Future Cars: Everything We Know About The 2026 Tesla Model Y ‘Juniper’

According to the Deutsche Bank report, Axelrod participated in the bank’s Autonomous Driving Day in New York, where discussions centered around Tesla’s Full Self-Driving (FSD) technology, robotaxi development, and the Optimus humanoid robot. Somewhere in this high-tech mix, Tesla’s product plans for 2025 emerged, though the details were far from comprehensive.

Product Roadmap

The Deutsche Bank report offers a broad overview of the meeting, albeit without attributing direct quotes to Axelrod. However, the context strongly suggests that the new lower-cost model was a key topic of discussion. If true, this marks a significant shift in Tesla’s product strategy for the coming years.

The report outlines Tesla’s strategy to unveil several new vehicles in 2025:

New models and 2025 volume growth

• A new, entry-level EV referred to as “Model Q” is set to launch in the first half of 2025. It will reportedly be priced under $30K with subsidies (or $37,499 without).
• In the second half of 2025, Tesla is expected to release additional models aimed at expanding its total addressable market (TAM). One of these is believed to be a 3-row, longer-wheelbase Model Y variant, likely exclusive to China.
• Tesla plans to build all new models on existing production lines, emphasizing efficient use of capacity to achieve its targeted 20–30% volume growth in 2025.
• While management remains confident in scaling up the China supply chain, the high end of Tesla’s volume target will require flawless execution, particularly in North America.
• The company’s plans for its Mexico plant remain dependent on geopolitical developments and tariff policies under the new Trump administration.

A Budget (Driveable) Tesla

Now, let’s dissect the key points regarding the model presentations. Arguably, the most noteworthy aspect here is the introduction of a more affordable model, tentatively named “Model Q” by Deutsche Bank rather than Axelrod himself. Notably, the report made no mention of specifications or the rumored “Redwood” codename circulating online.

Elon Musk has been skeptical of low-cost models in the past, not out of dislike, but because of the significant challenges in achieving profitability, maintaining quality, and overcoming high development and production costs.

Back in October, during an investor call, he stated, “Having a regular (aka driveable) $25K model is pointless. It’d be silly.” That said, the projected $30K price point for the Model Q doesn’t contradict Musk’s remarks. If anything, it suggests Tesla is threading the needle by offering a lower price point without completely compromising its profitability.

Future Cars: What Could A Tesla Model 2 Look Like?

Currently, Tesla’s least expensive vehicle in North America is the RWD, single-motor Model 3, priced at $34,990 with the $7,500 federal tax credit (or $42,490 without). This makes the introduction of a sub-$30K Tesla a significant move – assuming it’s more than just a smaller, stripped-down version of the Model 3.

What Form Could The Model Q Take?

If the Model Q materializes, it begs the question: will it be an entirely new, compact offering or a derivative of existing models like the Model 3 or Y? Perhaps it could take shape as a smaller hatchback with crossover-like proportions, as shown in our rendering. A more far-fetched, albeit intriguing, possibility might involve a driveable version of the Cybercab. But I digress. It’s anyone’s guess at this point, but the report points to a reveal in the first half of 2025, meaning we won’t have to wait long for answers.

Stretched Model Y For China

The Deutsche Bank report also confirms recent rumors from China about a stretched, three-row version of the Model Y. This longer-wheelbase variant is designed specifically for Chinese buyers and is expected to build upon the refreshed Model Y, codenamed “Juniper,” which is set to debut next year. The addition is logical in a market where larger/longer family vehicles are highly appealing, enabling Tesla to better compete with local rivals.

What Else Is Coming?

As for the “other new models” mentioned in the report, details remain vague. However, Tesla’s focus on expanding its Total Addressable Market (TAM) indicates the company is aiming to capture new customer segments – whether through pricing strategies, diverse body styles, or regional exclusivity.

More: Musk Predicts Tesla’s 2025 Sales Will Surge 30%, Gives A Nice Boost To Share Prices

Additional points in the report highlight Tesla’s confidence in scaling its supply chain, particularly in China, while also emphasizing the challenge of flawless execution in North America. Regarding Tesla’s much-discussed Mexico plant, its future hinges on geopolitical factors and tariff policies under the new Trump administration, which is an unpredictable variable, to say the least.

A Critical Year Ahead

While the Deutsche Bank document offers an intriguing glimpse into Tesla’s roadmap, it stops short of providing concrete details. What we do know is that 2025 is shaping up to be a pivotal year for the EV maker, with affordability and versatility taking center stage.

Looming over all of this, however, is the potential for a seismic shift in America’s EV policy. If the upcoming Trump administration scraps the $7,500 federal tax credit – arguably the key driver of EV sales – Tesla and the broader industry could face serious headwinds. Germany serves as a cautionary tale; after subsidies were cut in December 2023, Tesla’s sales there plummeted by over 43% this year.

Obviously, the stakes couldn’t be higher. Yet, as always with Tesla, the answers remain as unpredictable as the company itself.

Puts and takes for 2025 margins

• Tesla explained that 2025 will be a year of product launches, and whenever that happens, there will be disruption to profitability as it will be in the early days of building a product and have more inefficient fixed cost absorption.
• But this could be offset by a lower cost of goods sold from the more affordable products.
• 2025 margins will also hinge upon where ASP (Average Selling Prices) lands based on the demand curve.
• The main goal is to focus on growing volume and garnering incremental gross profit (as opposed to targeting a certain gross margin %), delivering at least overall FCF (Free Cash Flow) breakeven. The auto business is basically funding more ambitious future projects.