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The first examples of the more affordable sibling to the Tesla Model Y SUV – reportedly 20 per cent cheaper to build – have been delayed, it has been claimed.
Electric Cars
Plans for a cheaper and smaller version of the Tesla Model Y electric SUV – as the company's long-awaited more affordable model – have hit a speed bump, according to a new report.
Reuters claimed production of the new model – said to be codenamed E41 – in the US is now not due to commence until sometime between the third quarter of this year (July to September), and early 2026.
The outlet has previously reported Chinese production of the car is due to begin in 2026 – where Australian models are likely to come from – and it has not indicated any delays.
It was long believed Tesla's publicly-stated plans for more affordable cars would entail bespoke vehicles, smaller in stature and price to rival the BYD Atto 3 or MG 4.
Last month's Reuters report indicated Tesla is preparing to follow a less radical path, with a "smaller" Model Y that would cost "20 per cent less to produce".
If it translates to a 20 per cent lower price in showrooms, the 'E41' could start from about $47,000 before on-road costs – down from $58,900 – which would remain dearer than an Atto 3 ($44,990).
A "bare-bones" version of the Model 3 is also said to be in the works, possibly as an internationalised version of a variant recently introduced in Mexico, with non-heated seats and features such as a rear passenger screen deleted.
Reuters reports Tesla had been planning to build 250,000 examples of the "stripped-down" Model Y in the US next year – compared to an estimated 370,000 regular Model Ys sold there in 2024.
Using existing production lines, but elements of its next-generation vehicles – including the Cybercab autonomous car – the E41 is also reportedly due to be built in Europe at a later date.
The reasoning for the delay is unclear, and Reuters says any impact of US President Donald Trump's new tariffs on the vehicle would be reduced as "Tesla has increased North American sourcing for parts of many models over the last two years".
The production name for the E41 project is yet to be confirmed, and Tesla has not commented on the vehicle beyond the following statements included in investor presentations over the past 12 months.
"Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025," it said in its last investor report.
"These vehicles will utilise aspects of the next generation platform as well as aspects of our current platforms and will be produced on the same manufacturing lines as our current vehicle line-up."
Reported plans for a version of the Cybercab with a steering wheel and pedals were shelved last year to focus on the autonomous version.
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Alex Misoyannis has been writing about cars since 2017, when he started his own website, Redline. He contributed for Drive in 2018, before joining CarAdvice in 2019, becoming a regular contributing journalist within the news team in 2020. Cars have played a central role throughout Alex’s life, from flicking through car magazines at a young age, to growing up around performance vehicles in a car-loving family. Highly Commended - Young Writer of the Year 2024 (Under 30) Rising Star Journalist, 2024 Winner Scoop of The Year - 2024 Winner
