Tesla has quietly begun producing a stripped-down version of its best‑selling Model Y, aiming to offer a more accessible electric SUV.
The new variant, which Musk confirmed is “just a Model Y,” entered initial production in June and is slated for volume rollout in the second half of 2025.
Designed to reduce manufacturing costs by around 20%, it will be sold in China and later in Europe and North America under the project codename E41.
Production & Timeline for Tesla
Tesla CEO Elon Musk confirmed initial builds began in June, with mass production scheduled for Q4 2025, coinciding with the end of the US EV tax credit period.
Reuters first reported the E41 project targeting a 20% reduction in production cost and launching in 2026 from Shanghai, then expanded to Western markets.
Design & Feature Simplification
Rather than introducing a new model, Tesla is delivering a budget-friendly trim of the Model Y, shedding premium touches to cut costs. Features likely removed include leather upholstery, ambient lighting, rear entertainment screens, HEPA filters, and possibly reducing camera or infotainment components.
Strategic Purpose
This cost-conscious variant addresses Tesla’s decline in key markets—particularly China—where the company’s share dropped from 11.7% to 10.4% amid fierce competition from brands like Xiaomi’s YU7 and BYD. Teslarati notes this move aims to reach price-sensitive buyers without diluting the lineup.
Pricing & Market Rollout
Tesla hasn’t revealed an official price, but analysts anticipate a sub‑$30,000 U.S. price point after incentives, positioning it below existing Model Y trims.
Launch markets include China initially, followed by Europe and North America via existing Model Y production lines.
