Tesla Inc. has commenced production of a more affordable electric vehicle, according to reports from InsideEVs. This move aims to expand the company`s market reach and address calls for a lower-priced EV.
During a shareholder meeting following the Q2 2025 earnings report, Tesla CEO Elon Musk confirmed the existence of this budget-friendly EV. Musk clarified, “This car is simply a new version of the Model Y.” The Model Y is an electric crossover, which originally began production in 2020.
The entrepreneur noted that assembly of this new vehicle variant started in June, with mass production scheduled for the second half of 2025. “We continue to expand our vehicle offerings,” Musk declared, emphasizing the company`s commitment to broader accessibility. According to Tesla Senior Vice President Lars Moravy, the new electric car is expected to be available for purchase by customers in the fourth quarter of 2025.
While Tesla has not yet disclosed the exact pricing for the new vehicle, it`s anticipated to be significantly lower than existing models. In the United States, the standard Model Y is currently priced at $44,990, with buyers potentially qualifying for a federal tax credit of $7,500. Journalists from InsideEVs and Electrek speculate that this more affordable Model Y variant could be priced around $35,000, making it a compelling option for a wider consumer base.
Analysts at InsideEVs suggest that introducing a relatively inexpensive EV is Tesla`s primary strategy to re-accelerate sales growth, particularly as the company navigates increasing competition and market pressures. This new model is seen as crucial for regaining momentum in sales volume.
The announcement comes as Tesla reported its financial performance for the second quarter, where its profit declined to $1.172 billion. This figure represents a 16.3 percent decrease compared to the same period in the previous year, underscoring the company`s need for new growth drivers.
