A low-cost Model Y likely to attract more customers, and it’s reportedly coming

Tesla could bring a new low-cost Model Y variant to ramp up demand in the face of growing challenge from Chinese EV makers, suggests a new report.

This new vehicle project, codename “E41”, is under development at its production lines at Giga Shanghai and Mass production is aiming for 2026.

This car has a smaller form factor compared to the new Model Y and costs about 20% less to manufacture.

In early January, Tesla introduced the new Model Y with front and rear design changes. The car is overhauled to get a new look compared to the existing Model 3 and the outgoing Model Y.

The front has a facelift thanks to the new lightbar, which slipped the headlamps a few inches below. The air vents are improved to reduce air drag and pass more of it through wheels. The rear side has a marquee cross-car lamp with indirect reflective lighting.

The cabin is upgraded with ambient lighting, improved front display, better ventilation, an 8-inch second row display with separate climate controls and powered seats.

Credit – Tesla

Tesla initially listed a Launch Series, a limited edition Model Y. It was recently phased out to bring two trims – rear-wheel drive and long range all-wheel drive. Both of these are priced at 263,500 yuan ($36,400) and 303,500 yuan ($41,930) respectively.

The less production cost should be redirected to the customers, which means the new car could come around 200k yuan ($30,000). However, there are no specifics about the price available at the moment.

This new Model Y production will start at Giga Shanghai to face the market competition and win back the lost shares to competitors. Tesla may also build this at Giga Berlin and in the US on a later date.

This report follows, Tesla CEO, Elon Musk’s repeated statement on a lower-cost EV variant but without revealing a launch date. He did say at one time that the company will use an existing production line to manage the cost of new product.

The Model Y was the best-selling car in 2023 and 2024, and it’s very popular among Chinese customers, but introduction of new competitors of Xiaomi continue to shift the sales paradigm, causing Tesla to lose its share in the process.

(source – WSJ)