Tesla’s push for a more affordable electric vehicle may manifest as a scaled-down version of its popular Model Y SUV, according to a recent report.
News agency Reuters, citing sources with insight into Tesla’s plans, indicates the automaker is developing a lower-cost Model Y, code-named E41, with production slated to begin in China next year.
Reuters’ sources suggest that the new model will be “smaller” and “cost at least 20 per cent less to produce” than the current Model Y. The regular Model Y currently sells for approximately $57,500 in China, before on-road costs, which translates to about $63,400 in Australia.
If the 20% cost reduction applies across the board, including Tesla’s profit margins, the cheaper Model Y might be priced below $50,000 before on-road costs, making it a more competitive offering.
Production of the lower-cost Model Y is reportedly planned for China, Europe, and North America. Shanghai will primarily serve the Chinese market, where Tesla faces growing competition from domestic brands. Meanwhile, US production may begin sooner, as Tesla has indicated an intention to begin production of its “more affordable” models during the first half of 2025.
Chinese website 36kr, which also cited its own sources, initially reported on the vehicle, indicating that the model could launch as early as the second half of 2025 if the response to the current Model Y is not as strong as anticipated.
The website has drawn comparisons between the stripped-down Model Y and a more affordable Model 3 launched in Mexico last year. The Mexican Model 3 sacrificed features like heated seats and a rear entertainment screen to achieve a price reduction of around $6,000 AUD, while maintaining the same electric motor and battery. 36kr suggests the same approach will apply to the more affordable Model Y.
Tesla has provided limited information about the forthcoming model, and spy photos are scarce. This suggests that changes to the bodywork might be minimal. The company has confirmed that the cheaper model will utilize existing production lines.
“Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025,” Tesla stated in a recent investor report. “These vehicles will utilise aspects of the next generation platform as well as aspects of our current platforms and will be produced on the same manufacturing lines as our current vehicle line-up.”
The report also mentions that Tesla has apparently discontinued the plan to create a version of the Cybercab with a steering wheel and pedals. The company is now focusing on more conventional new EVs that share more in common with existing models, such as the Model Y.
According to Reuters, a six-seat version of the latest Model Y is on track for release in the Chinese market later this year.
