Tesla is hitting the brakes on its next big EV launch. The company is now planning to delay the US release of its more affordable Model Y, internally code-named E41, until late 2025 or early 2026, according to a Reuters report. That’s a notable shift from Tesla’s earlier pledge to start building budget-friendly vehicles in the first half of 2025.
Tesla didn’t immediately respond to a request for comment.
The new model is expected to be a stripped-down version of the current Model Y, optimized to be about 20% cheaper to build. With the standard Model Y starting at around $49,000 before tax credits, this upcoming variant could push Tesla deeper into the mainstream EV market, if it ever arrives. Tesla hopes to produce 250,000 of the new SUVs in the US by 2026 and plans to expand production to China and Europe later on. A lower-cost Model 3 is also in the works.
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Tesla has floated a $25,000 EV for years, but focus has increasingly shifted toward its long-promised robotaxi platform. Though CEO Elon Musk hasn’t officially scrapped the low-cost model, Tesla’s priorities appear to have changed as the company looks to maintain its edge in an increasingly competitive EV market, especially as Chinese brands push out cheaper, feature-packed alternatives.
Tesla is also navigating a rougher policy landscape. Even with Musk’s ties to the current Trump administration, the company has had to shift its supply chain strategy in response to a 25% tariff Trump placed on imported vehicles and auto parts. That’s putting extra pressure on Tesla to localize production and keep costs down, especially for a car meant to be affordable.
With delays stacking up and the affordable EV space getting more crowded by the day, Tesla’s window to stay ahead might be narrowing. Whether it can deliver the right products at the right price, before the competition does, is the big question.