Tesla discontinued the Model S and X electric cars earlier this year, leaving only the Model 3 and Cybertruck in its portfolio. But it seems the company has another low-cost car in the making, and according to Reuters, it could be a small SUV. Interestingly, in March, Musk also teased that “something way cooler than a minivan is coming,” though it’s unclear whether it’s a consumer vehicle or something like the Cybercab.

So, what’s cooking at Tesla?

“The automaker has contacted suppliers in recent weeks to discuss details of the plan for the compact SUV – which would be a new vehicle and not a variant of Tesla’s current Model 3 or ​Y,” says the Reuters report, citing at least four anonymous sources. The scoop comes at a rather interesting point in time. Tesla reportedly axed plans for a cheap electric car not too long ago, with Musk noting that the company plans to focus on its robotaxi and humanoid robot efforts.

The upcoming car will be “significantly” shorter than the Model Y, coming in at 14.04 feet in length. To recall, small-format SUVs are extremely popular, especially in core EV markets such as China, where labels like BYD, Geely, Zeekr, and Xiaomi are heavily focusing on electric SUVs that give Tesla’s offerings a run for their money in terms of looks and features. Tesla will reportedly kickstart production of this rumored car in China, but could eventually expand it to factories in the US and Europe, as well.

Wait, it’s going to be cheaper?

According to the Reuters report, the upcoming car could command “a substantially lower ​price than its entry-level Model 3 sedan,” which is priced at $36,990 in the US for the entry-point RWD trim. Interestingly, it could come equipped with a smaller battery pack to cut costs, which means the range will hover around 300 miles, or even lower. The number of motors could also be reduced to one, but more importantly, it could be offered in driverless as well as human-driven options.

It seems the company wants to dominate the EV market once again, as Chinese rivals like BYD and Geely continue to bring down the price barrier while making big leaps in core areas such as charging speeds and net range figures. Tesla lost its crown to China’s BYD as the world’s largest carmaker, but the company reached the summit once again towards the end of 2026’s first quarter. Tesla now wants to take a big swing, apparently, and dominate its rivals by undercutting them on the price ladder.