Tesla CEO Elon Musk has confirmed its incoming, affordable electric car is "just a Model Y" that has been made cheaper, rather than a completely new model.
Electric Cars
Tesla has confirmed its next model is "just a Model Y" that will be made more affordably.
During Tesla's second-quarter 2025 investor call, CEO Elon Musk said the new model is "just a Model Y… [I've] let the cat out of the bag there," claiming a lower price would allow more customers to access its electric cars.
"Fundamentally, the biggest obstacle remains… the desire to buy the car [Model Y] is very high," Musk said.
"People don't have enough money in their bank account to buy it. Literally that is the issue – not a lack of desire, a lack of ability. So, the more affordable we can make the car, the better."
In a shareholder statement, Tesla said it started building the new model last month, ahead of volume production scheduled for later this year.
"We continue to expand our vehicle offering, including first builds of a more affordable model in June, with volume production planned for the second half of 2025," Tesla said.
In April, Reuters reported the new model – said to be codenamed E41 – would commence production between July and September 2025 in the US, or early 2026, while earlier reporting suggested Chinese production would begin next year.
It has been reported the new model, while based on the Model Y, would have a "smaller" body and would cost "20 per cent less to produce".
The stripped-down Model Y could follow a basic Model 3 variant launched in Mexico in 2024, which featured black cloth seats instead of the black or white artificial leather found in the entry-level Rear-Wheel Drive variant elsewhere.
It also lost the standard model's rear touchscreen, acoustic glass, colour-selectable ambient lighting (white only), seat heating and ventilation, and heated steering wheel.
A recent spy photo, shared by @DominicBRNKMN on X, appears to show the stripped-back Model Y could lose its glass roof for a fixed metal roof, while it appears to be shorter with the same wheelbase, similar to the difference between the Skoda Elroq and Enyaq electric SUVs.
A Model Y costing 20 per cent less would translate to around $47,000 before on-road costs in Australia, as the current Model Y Rear-Wheel Drive starts from $58,900 – though it is unclear if its retail price would fully reflect the 20 per cent manufacturing cost saving.
The Tesla Model Y L has not been confirmed for Australia, but it is built in the same Shanghai, China factory as standard, five-seat Model Ys sold locally.
Electric Cars Guide
Jordan is a motoring journalist based in Melbourne with a lifelong passion for cars. He has been surrounded by classic Fords and Holdens, brand-new cars, and everything in between from birth, with his parents’ owning an automotive workshop in regional Victoria. Jordan started writing about cars in 2021, and joined the Drive team in 2024.
