The Tesla Model Y is one of the best-selling EVs in the world, but the carmaker does need more affordable choices in its lineup. Well, Tesla has been working on a pared-back version of the Model Y which was expected to debut in the US this summer, but a new report from Reuters reports that this model has been delayed. Codenamed E41, the diet Model Y will be positioned as a more economical alternative to Tesla’s existing line-up and is intended to bolster flagging sales and attract new customers.
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Revised Timeline and Production Targets
Delay in US Manufacturing Start
According to sources familiar with the matter, the start of production for the affordable Model Y in the United States will be postponed by several months. While initially expected to begin in the first half of 2025, revised internal timelines now place the launch between the third quarter of this year and early 2026.
Read the entire Reuters article here.
While Tesla buyers are no strangers to delays (coughs in Cybertruck), this more affordable electric crossover needs to be market-ready without excessive delays in order to be competitive against the rise of affordable and quality EVs from brands like BYD.
Output Goals for 2026
Tesla is reportedly targeting the production of 250,000 units of the budget-friendly Model Y in the US by 2026. The company has also outlined long-term plans to expand production to China and Europe, although the European launch timeline remains uncertain. In China, local production of the E41 is set for 2026.
Cheaper Model Y: A Scaled-Down Approach
The E41 is expected to be smaller and approximately 20% cheaper to manufacture than the current refreshed Tesla Model Y, which now features updates to both its exterior and interior. In the US, the Long Range All-Wheel Drive Model Y currently retails for approximately USD$49,000 before federal tax incentives. Meanwhile, in Australia, the updated Model Y prices start from $58,900 (before on-road costs). This new version could bring down its prices to start from under $50k.
More Entry-Level Tesla Models Coming
Tesla is also said to be preparing a more basic version of its Model 3 sedan, as part of a broader strategy to appeal to cost-conscious buyers. These initiatives are to be supplemented in the future by a new, smaller EV offering, confirmed by earlier statements from CEO Elon Musk regarding the development of a $25,000 electric vehicle platform. However, the mass-market Tesla EV project was reportedly deprioritised in favour of robotaxi development.
Challenges Facing Tesla
Slowing Sales and Brand Pressures
Tesla reported its first annual decline in deliveries in early 2024, and analysts anticipate a continued sales dip in 2025. Factors influencing this include limited model updates, lack of affordable EV options compared to competitors, and the polarising public and political engagements of CEO Elon Musk.
Tariffs and Supply Chain Adjustments
Rising trade tensions and tariffs being imposed by and against the US have further complicated production logistics. A 25% tariff on vehicle and auto parts imports, introduced during the Trump administration, has prompted Tesla to scale back certain plans, such as shipping components from China for its Cybercab and Semi truck projects. However, the company has increased local sourcing in North America for many components, which could reduce the tariff impact on the upcoming E41 model.
Looking Ahead
While Tesla has not officially confirmed the delay or provided a comment on the reported production adjustments, investor focus remains fixed on the company’s upcoming product roadmap. With quarterly results imminent, clarity on the future of the affordable Model Y and broader production plans is expected to be a key area of interest.
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