Tesla has informed its suppliers of plans to start producing a new mass-market EV, codenamed "Redwood," by mid-2025. Reuters broke the news less than 24 hours before Tesla’s call with shareholders. The media outlet used information from four sources “familiar with the matter,” with two describing the model as a compact crossover.
This can only be the $25,000 car, also known as the Model 2 or Next Gen. It’s not the first time that we’ve heard rumors of it being a smaller Model Y. The next-generation Tesla architecture, internally known as 'NV9X', is said to include at least two models. Tesla’s Master Plan suggested that there would be infinite demand for the less expensive car, projecting its fleet could match all of the other models combined.
Next Model in 2025
Tesla has approached suppliers requesting quotes for the "Redwood" model, forecasting a weekly production volume of 10,000 vehicles. Production is slated to begin in June 2025, according to three sources who spoke anonymously due to the confidential nature of the information. However, the fourth downplayed the timeline, stating that most of Tesla's new product launches have been overly optimistic, with volume output more likely to start in 2026.
Sources also revealed that Tesla has recently dismantled a Honda Civic, priced at $23,950 in the U.S., to study methods of producing more affordable cars.
Concept of Next Gen
Not a Tesla App
One of the most upvoted queries from investors, ahead of Tesla's fourth quarter and year-end report, concerned the timing of the next-gen compact vehicles, and for good reason. Tesla fell behind BYD as the world’s leading EV producer in the last quarter of 2023. Add that to the new push to gas-powered cars thanks to a refreshed attack on EVs since the Big 3’s labor strife. Tesla must put its shareholders at ease addressing these factors head-on, precisely what a mass market, less expensive vehicle would do.
The Long History of the Cheaper Tesla
Musk initially promised a $25,000 car in 2020, a plan he later paused and reinstated. Tesla's most budget-friendly model, the Model 3 sedan, currently has a starting price of $38,990 in the United States. In the previous year, Musk commented on the sensitivity of high-ticket items, such as cars, to rising interest rates among consumers. In May, Musk revealed that Tesla was developing two new products, potentially unveiled within the year, with a combined annual sales potential of 5 million vehicles.
During Tesla's shareholders meeting, he emphasized, "Both the design of the products and manufacturing techniques are head and shoulders above anything else that is present in this industry." Walter Isaacson's biography of Musk hints at the more affordable car and the Robotaxi based on the same vehicle architecture. There was even a picture that gave away several clues.
Picture from Elon Musk Biography
Not a Tesla App
Last March, Musk and other Tesla executives outlined plans to halve the cost of their next-generation vehicles, although a specific timeframe for these launches was not provided. About a year ago, chief designer Franz von Holzhausen said that the car he is most excited about is the one he is currently working on but could not talk about.
Musk stated last year that the affordable model would initially be manufactured at Tesla's factory in Texas. Additionally, Tesla plans to manufacture more affordable cars at its plant near Berlin and has expressed interest in establishing a factory in India to produce smaller, cheaper electric cars.
Winter is here, and temperatures are dropping, so one of the most common Tesla questions is about to resurface.
If you’ve landed here after frantically searching about “smoke” coming from your Tesla while Supercharging, take a deep breath—it’s completely normal.
Tesla Smoking While Charging
If you’re Supercharging in freezing weather—even with preconditioning—you might notice steam rising from your Tesla. But rest assured, your car isn’t smoking.
Your Tesla’s heat pump is hard at work warming both the cabin and battery to keep you comfortable and ensure optimal charging temperatures. Over time, condensation and ice build-up in the heat exchanger coils.
Why Does It Happen?
When you reach a Supercharger with your vehicle, the heat pump is still running hot, but without the cold air from driving to keep the heat exchanger coils cool, the ice and condensation quickly start to evaporate—creating what looks like smoke.
Since this typically happens near the front of the vehicle, where a car would traditionally have an engine, new vehicle owners can be startled by the discovery. However, rest assured that it’s just water vapor and it’s completely normal in cold weather.
In fact, this behavior can be experienced in any EV with a heat pump in cold climates. So, if you saw steam coming out of your vehicle and panicked, don’t worry—you’re not alone.
Now that you know what’s happening, go ahead and Supercharge with confidence.
Tesla made a lot of improvements in the 2024 Holiday Update, including more than 15 undocumented improvements that were included in the release. One of these was a stealthy performance improvement to the YouTube app.
Several people have mentioned they’ve seen improved performance on YouTube since this year’s Holiday Update - and there’s an interesting reason why.
YouTube Improvements
The improved YouTube performance in Tesla vehicles comes from an unexpected source—Tesla actually rolled back support for YouTube’s newer AV1 video encoding. Instead, vehicles now default to the older VP9 encoding standard.
While AV1 is highly efficient in terms of bandwidth, it requires considerably more processing power to decode and display videos. VP9, on the other hand, is less computationally demanding but uses more bandwidth to achieve the same video quality. This trade-off means smoother playback and better overall performance, even if it comes at the cost of slightly higher data usage.
Intel Inside
The VP9 video codec that the YouTube app is now using is much easier to decode, making it less taxing on the vehicle’s processor. This change is particularly beneficial for Tesla vehicles with Intel processors, which previously struggled to stream video at just 720p. When using AV1, these vehicles often experienced stuttering, sometimes forcing the YouTube app to automatically downgrade playback to 480p.
With this update, Intel-based Teslas should now be able to stream at 1080p smoothly. Streaming at 1440p is also possible, although occasional stutters still occur as the system keeps up with the decoding process.
Intel-based vehicles are the big winners with this change, but this appears to affect AMD Ryzen-based infotainment units as well, providing even smoother playback.
Chromium Web App
Tesla’s Theater apps aren’t native applications; instead, they run as chromeless web apps, leveraging the open-source browser built into Teslas known as Chromium (the open-source version of Chrome). Although this works quite well, there is a severe limitation - Chromium hardware acceleration isn’t supported on Linux, the operating system Tesla uses for their OS.
As a result, Tesla vehicles rely on software decoding instead of hardware decoding, which would otherwise handle video playback far more efficiently. A potential solution could be for Tesla to transition away from Chromium-based web apps in favor of a Mozilla Firefox-based browser, as Firefox does support hardware acceleration on Linux. This switch could also open the door to better streaming performance and the possibility of expanding Tesla’s in-car entertainment options.
However, Tesla’s choice of Chromium likely stems from Digital Rights Management (DRM) requirements for streaming services like Disney+ and Netflix, which rely on DRM-enabled playback. Firefox on Linux has had inconsistent support for DRM due to codec availability and variations in operating system versions.
We’re hopeful that Tesla will either adopt Firefox or develop a fully native application to improve video streaming, rather than continuing with the current web-based Tesla Theater. This shift could also pave the way for additional in-car applications built on Tesla’s native Linux environment—perhaps even reviving the long-rumored Tesla App Store.
Regardless, this update is a welcome improvement, particularly for YouTube, which remains one of the most widely used Theater Mode apps due to its accessibility, free content, and mix of short and long-form videos. It remains to be seen whether similar improvements are made for Netflix, Disney+, or other streaming platforms.
If you’ve noticed improved performance in Theater Mode, now you know why.
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