Preparations underway for an affordable electric car model, allegedly modeled after the Model Y by Tesla.
In a move aimed at bolstering its presence in the highly competitive Chinese market, Tesla is developing a more affordable version of its popular Model Y electric vehicle, internally known as "E41." According to a report published by the Chinese publication 36Kr, citing industry circles, the cheaper Model Y is expected to offer a significant reduction in production costs, estimated to be at least 20%, compared to the current Model Y.
The new affordable Model Y is said to be a response to a price war in China, where local brands like Xiaomi and Xpeng are gaining ground with more affordable options. The report does not specify the exact price of the cheaper Model Y compared to the current one, but it is expected to be significantly lower.
Tesla's range will subsequently grow further, according to the CFO's statement. However, there have been delays in the production of the stripped-down Model Y, with the initial expectation of production starting in the first half of 2025. The release date of the cheaper Model Y may depend on the sales performance of the freshly updated Model Y; if it disappoints, it may be released in the second half of this year.
Model 3 and Model Y will serve as the technical basis for new models, utilizing elements of the next-generation platform, according to Tesla's statements. The development of the cheaper Model Y is using a "depop" method, aiming for simplification without sacrificing essential functions. If the reports are correct, Tesla may offer the cheaper Model Y by omitting features like the front display or seat heating to lower its price.
It is not clear from the report whether the latest Model Y will keep its name or if Tesla may offer cheaper variants of both Model 3 and Model Y. The report from 36Kr does not sound like it refers to truly new electric cars with their own body shapes and names.
Tesla recently upgraded the Model Y and Model 3 in China, enhancing their performance and range, but these upgrades do not pertain to a new, cheaper model. Instead, they focus on improving the existing lineup's capabilities. The company is offering significant discounts on current models in China, which suggests they are facing strong competition and are trying to maintain market share.
Tesla's CFO reaffirmed that they are still on track to bring an affordable model to market in the first half of 2025, without making the launch dependent on the previous sales performance of the Model Y. The cheaper Model Y, according to Reuters, will be smaller than the current Model Y.
Production of the new affordable models was initially expected to start in the first half of 2025, but there have been delays. The cheaper Model Y is scheduled for series production to start in 2026, with production primarily in China, but also in Europe and North America. The battery, performance, and chassis of the cheaper Model Y have hardly changed.
The cheaper Model Y is intended as a backup plan if sales of the recently revised Model Y are disappointing. However, Tesla remains optimistic about the sales performance of the revised Model Y, and the cheaper Model Y may not be necessary if the revised Model Y performs well in the market.
- Tesla's cheaper Model Y, internally known as "E41," is being developed to respond to the price war in China, where local brands like Xiaomi and Xpeng are offering more affordable options in the automotive industry.
- The affordable Model Y is expected to offer a significant reduction in production costs, estimated to be at least 20%, compared to the current Model Y, potentially influenced by the use of a "depop" method for simplification.
- The report suggests that Tesla may offer the cheaper Model Y by omitting features like the front display or seat heating to lower its price, and it might be smaller than the current Model Y, according to Reuters.
- Tesla's CFO has announced that the cheaper Model Y, despite production delays, is still scheduled for series production to start in 2026, primarily in China, but also in Europe and North America, with its battery, performance, and chassis hardly changed.
