Tesla has long promised an affordable vehicle to bolster sales. That car, a stripped-down, bare-bones Model Y, was supposed to show up in the first half of this year. But now, it’s been delayed by “at least several months,” according to a report by Reuters.
The cheaper vehicle, codenamed E41, could now start production anywhere from the third quarter of 2025 to next year, sources tell Reuters. No reason was cited for the delay, though tariffs hindering parts importation could be to blame. It’s also possible that CEO Elon Musk has delegated too much of his time to running the Department of Government Efficiency (DOGE) to get the ball rolling.
Photo by: Tesla
Tesla has been promising an affordable, entry-level vehicle for years. The company was finally set to introduce a standalone $25,000 car in 2025 before Musk reportedly killed those plans, instead pivoting towards a two-door Robotaxi called the Cybercab, set to hit the streets in 2026. Now, the company is planning a cheaper Model Y and later, a cheaper Model 3, says Reuters.
A delay in such models would come at a bad time for Tesla. The electric carmaker saw a decline in annual deliveries for the first time ever last year, and sales are down 13 percent in the first quarter of 2025, plagued by an aging lineup and Musk’s polarizing political actions, which have caused extensive damage to Tesla’s brand reputation.
Reuters says production of the cheaper model would start in the US in late 2025 before also kicking off in China in 2026. The car will be smaller and cost 20 percent less to produce than the equivalent Model Y, according to the report.
The cheapest Tesla on sale right now is the Model 3 Long Range AWD, which starts at $44,130 including destination. Want a Model Y? It’ll cost you at least $50,380. A cheaper car could be the only way for Tesla to attract new buyers. But that all depends if the company can actually get it into production.
