Tesla has postponed the U.S. production launch of a lower-cost version of its Model Y SUV, internally codenamed E41, according to three sources familiar with the matter.
Originally planned for the first half of 2025, production is now expected to begin between Q3 this year and early 2026. The reason for the delay remains unclear, reports Reuters.
The affordable Model Y is part of Tesla’s broader strategy to boost declining sales and recapture market share. Two sources revealed Tesla plans to produce 2,50,000 units of the new version in the U.S. in 2026.
Global production is also planned for China and Europe, though exact timelines remain uncertain. A launch in China is reportedly slated for 2026.
Tesla has not publicly confirmed these plans or the delay. The company is set to report its quarterly results on Tuesday, and updates on new vehicle development are expected to be a key focus.
The E41 is designed to be smaller and 20 percent cheaper to produce than the refreshed Model Y, which currently sells in the U.S. for around $49,000 before tax credits. The company is also working on a stripped-down version of the Model 3 sedan.
Tesla's need for a more affordable EV has grown more urgent following its first annual delivery decline reported in January. Analysts anticipate further sales drops due to an aging vehicle lineup, rising prices, and reputational damage linked to CEO Elon Musk’s political affiliations.
Musk had previously promised a $25,000 EV based on a new platform but recently shifted focus to developing a robotaxi. Meanwhile, the company faces added pressure from possible supply chain disruptions and tariffs—like those proposed by Donald Trump, including a 25 percent tariff on foreign vehicles and parts.
Tesla has been increasing its North American parts sourcing to mitigate tariff risks. It recently suspended component shipments from China for its Cybercab and Semi models.
Despite growing demand for cheaper EVs, Tesla’s timeline for delivering such vehicles appears increasingly uncertain.
Bd-pratidin English/ FNC
