Tesla Has Reportedly Begun Early Supplier Talks For A Budget SUV

• The report adds that Tesla’s new compact SUV would be about 14 feet long, shorter than the company’s best-seller, Model Y, which is 15.7 feet long.
• Tesla is also said to be planning to save costs by using a smaller battery pack, which would result in a shorter driving range than the Model Y’s EPA estimated range of about 321 miles.
• The report cites a Tesla employee who said that this new compact SUV would serve a dual purpose for the EV giant, catering to its driverless vision for cars going forward while also offering a human-driven option.

Tesla Inc. (TSLA) is reportedly working on an all-new compact sports utility vehicle (SUV) that is said to be priced substantially lower than the Model 3.

According to a Reuters report citing people familiar with the matter, Tesla has reached out to suppliers over the past few weeks to discuss details of the compact SUV.

The Elon Musk-led carmaker is said to have discussed the manufacturing process and the specifications for the car’s components.

Tesla shares edged 0.3% lower in Thursday’s pre-market trade. Retail sentiment on Stocktwits around the company trended in the ‘bearish’ territory, while TSLA was the top trending ticker on the platform at the time of writing.

Shorter Length And Range Than Model Y

The report adds that Tesla’s new compact SUV would be about 14 feet long, shorter than the company’s best-seller, Model Y, which is 15.7 feet long.

Tesla is also said to be planning to save costs by using a smaller battery pack, which would result in a shorter driving range than the Model Y’s EPA estimated range of about 321 miles.

The new compact SUV from Tesla will be cheaper than the entry-level Model 3 sedan, which currently starts at about $37,000 in the U.S. The Model Y is a slightly more expensive car, starting at a price of $40,000.

The report cites a Tesla employee who said that this new compact SUV would serve a dual purpose for the EV giant, catering to its driverless vision for cars going forward while also offering a human-driven option.

Tesla could produce the new compact SUV in China, the U.S., and Europe, according to the report.

Tesla Q1 Deliveries Miss The Mark

The news of a potential affordable compact SUV from Tesla comes a week after the EV giant’s first-quarter (Q1) deliveries missed Wall Street’s expectations.

Tesla reported deliveries of 358,023 electric vehicles worldwide in Q1, falling short of a consensus estimate of 365,645 units, as compiled by the company, marking the second consecutive quarter of missing the mark.

In January, Tesla reported 418,227 deliveries in the fourth quarter (Q4), while Wall Street expected the EV giant to report 422,850 deliveries during the quarter.

The Future Fund’s Managing Partner, Gary Black, stated that the huge gap between Tesla’s production and deliveries in Q1 likely reflects weak demand for the company’s electric vehicles in the U.S.

Tesla manufactured 50,363 more vehicles than it delivered in Q1.

TSLA stock is down 24% year-to-date, but up 55% over the past 12 months. The S&P 500 ETF (SPY) is up 36% over the past 12 months, while the Invesco QQQ Trust ETF (QQQ) is up 46%.

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