Rahul Somvanshi
Tesla’s more wallet-friendly Model Y won’t be arriving as soon as expected. The electric carmaker has delayed production of this cheaper SUV, pushing it from the first half of 2025 to sometime between the third quarter of 2025 and early 2026, according to sources familiar with the company’s plans.
The delay comes at a challenging time for Tesla. As Reuters reports, “Tesla on Jan. 2 reported its first decline in annual deliveries last year,” and now buyers eager for a less expensive Tesla option will need to wait longer.
Tesla aims to produce 250,000 units of this more affordable Model Y in the United States by 2026. This new version, known inside Tesla as “E41,” will be smaller than the current Model Y and designed to cost about 20% less to make. The standard Model Y currently sells for around $49,000 before the $7,500 federal tax credit.
To hit a lower price point, Tesla plans to strip away some of the features found in the current model. While Tesla hasn’t confirmed exactly what will be removed, the approach might mirror what they did with a basic Model 3 released in Mexico last year. That car came without the second-row screen and ambient lighting strip, and used fabric interior material instead of Tesla’s usual vegan leather.
“Tesla is facing slowing sales and eroding market share,” notes Reuters. “The less expensive mass-market vehicles have been widely anticipated by Tesla fans and investors who hope they will attract a fresh group of customers.”
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This more affordable Model Y represents a shift in Tesla’s strategy. CEO Elon Musk previously talked about building an entirely new $25,000 car on a next-generation platform. Instead, he decided to focus on developing self-driving robotaxi technology and create cheaper versions of existing models.
For people looking to go electric without spending too much, this delay is disappointing. Many potential buyers have been holding out for a Tesla that fits their budget. Now they might need to consider other options while waiting for the more affordable Model Y to arrive.
The rising competition in the electric car market adds pressure on Tesla. More carmakers are offering electric vehicles at lower price points, giving budget-conscious shoppers alternatives while Tesla works through its production delays.
Tesla also plans to create a stripped-down version of its Model 3 sedan following a similar cost-cutting approach. The timeline for this model remains unclear.
The delay coincides with other challenges for Tesla, including new 25% tariffs on vehicles and auto parts imported from outside the United States. The company has reportedly increased its North American parts sourcing over the past two years, which could help reduce the impact of these tariffs on the affordable Model Y.
Tesla will report its latest financial results on Tuesday, April 22, when investors will likely press for more details about the company’s plans for more affordable vehicles. For now, the wait continues for anyone hoping to park a less expensive Tesla in their driveway.
