Tesla is reportedly developing a budget SUV in China as BYD continues to dominate the affordable EV market
Published on Apr 10, 2026 at 10:40 PM (UTC+4)
by Alessandro Renesis
Last updated on Apr 10, 2026 at 7:22 PM (UTC+4)
Edited by
Emma Matthews
The Tesla Model 2 never happened, but the manufacturer is apparently still considering a newer, smaller electric SUV to compete with BYD in China.
BYD surpassed Tesla a while back, and the American automaker is struggling to keep up because, among other things, it has a very limited line-up of vehicles.
And the entry-level price point is perhaps a bit too high.
Maybe that’s why new rumors suggest that Tesla is rethinking its strategy, and the company could launch a ‘budget’ SUV after all.
Could this be the long-awaited Tesla Model 2/Model Q?
Tesla has a tried-and-tested strategy that people either love or love to hate.
They tease an upcoming EV, then they tell you that they told you, and then they tell you that they’ll say more in the future.
If that sentence was hard to decipher, then that’s by design.
Because their strategy is also hard to understand.
We’ve seen it with Cybertruck, announced and delayed several times, and with Roadster, which is still not here.
We’ve also seen it with Model 2/Model Q, the entry-level Tesla that was never unveiled, unless we’re counting the Model 3 and Y ‘Standard.’
The Model 2/Q was never launched, but maybe that’s about to change, mainly because Tesla is losing its dominance to BYD.
However, recent reports suggest Tesla has re-engaged suppliers for a smaller SUV – nicknamed ‘Project Redwood’ – specifically to combat BYD’s cheaper models
The EV maker could potentially launch the new model in China
Chinese buyers are increasingly interested in domestic cars.
Tesla is the only ‘foreign’ manufacturer that’s allowed to operate without a joint venture with a local brand.
But even though that’s the main reason the company remains profitable, it doesn’t help them with sales.
Especially now that BYD is on the rise.
That’s why these rumors about an upcoming compact SUV are persistent.
If confirmed, the vehicle would be a scaled-down EV with a lighter frame, only one motor, and a smaller battery pack.
The vehicle would apparently be built in Shanghai, and so it’s not clear whether it would also be available outside of China.
And it’s too early to tell anyway.
First, we need to wait for the official announcement.
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After beginning his automotive writing career at DriveTribe, Alessandro has been with Supercar Blondie since the launch of the website in 2022. In fact, he penned the very first article published on supercarblondie.com. He’s covered subjects from cars to aircraft, watches, and luxury yachts - and even crypto. He can largely be found heading up the site’s new-supercar and SBX coverage and being the first to bring our readers the news that they’re hungry for.
