- Tesla’s more affordable EV is coming this year.
- According to unnamed sources, it will be a smaller, cheaper version of the Model Y crossover.
There have been rumors about a more affordable Tesla EV for a few years, but things seem to finally come together. According to three people who are knowledgeable about the matter, as quoted by Reuters, Tesla will launch a lower-cost model this year to try to regain lost ground in China and everywhere else.
The project, codenamed “E41,” will be built in Shanghai at first using existing assembly lines and technologies from current models to keep the costs down. As per two of the unnamed sources quoted by Reuters, the car will be smaller and cast at least 20% less to manufacture than the refreshed Model Y. This new information should put the rumor that Tesla’s upcoming more affordable EV would be just a barebones version of the Model Y to rest.
That’s what happened in Mexico last year, when Tesla started selling a cheaper version of the electric sedan with cloth seats, no rear-facing screen, white-only ambient lighting and no heated seats or steering wheel. In doing so, the base Model 3 in Mexico costs roughly $4,000 less than the U.S.-bound EV.
Mass production of the shrunken down and cheaper Model Y variant will begin next year in China. It will also be manufactured in Europe and North America, but a timeframe was not disclosed. The information that Tesla is developing a new EV to fend off competition in China was first reported by 36kr. According to the Chinese outlet, the new model is described as a “lower Model Y.”
Earlier this year, Tesla said during its fourth-quarter 2024 results that “plans for new vehicles, including more affordable models, remain on track for the start of production in the first half of 2025.” The company added that the new EVs would use parts of its next-generation platform as well as its current platforms and will be produced on the same manufacturing lines as the current passenger vehicle lineup. In other words, the Reuters and 36kr reports go hand in hand with Tesla’s official position.
A rendered image showing what the upcoming Tesla crossover could look like.
All this being said, there are still a lot of unanswered questions. We don’t know what the new EV will look like and what powertrain options will be available, but it’s likely that the American automaker will use the same electric motors and battery packs as those found in the current Model 3 and Model Y.
Last year, Tesla saw its first-ever sales decline. Despite the Model Y being a best-seller in many markets, the company’s grip is slipping. In the European Union, Tesla’s registration numbers went down by 13.1% last year. In China’s all-electric car market, Tesla’s market share slipped from 11.7% in 2023 to 10.4% last year. In the United States, it lost 10 percentage points of the EV market share, ending 2024 with 45.4%.
