Stripped-down versions of Tesla's affordable electric vehicles will be Model 3s and Model Ys
Tesla, the leading electric vehicle (EV) manufacturer, has announced plans to release cheaper electric car models by the end of 2025. The company aims to achieve this by producing simplified, lower-cost versions of its existing Model 3 and Model Y vehicles.
According to Tesla executives, these more affordable models will be based on the current Model 3/Y platform but will be engineered to reduce production costs by around 20%. This cost-saving approach will make the cars more accessible to a broader range of buyers.
The initial production of these affordable variants began in June 2025, with volume manufacturing expected to ramp up during the second half of the year. Tesla CEO Elon Musk confirmed that the strategy involves keeping the fundamental design similar but streamlining manufacturing and material costs to hit a lower price point without introducing an entirely new vehicle.
The expected result is a simplified Model Y, sometimes referred to with internal codenames like E41, featuring a slightly smaller body and a production cost about 20% less than the current Model Y. This would translate to a price significantly lower than the existing versions, with a suggested price tag of around AUD 47,000. However, exact pricing will vary by market.
Tesla's cost-saving approach will involve stripping back features such as the rear touchscreen, ventilated seats, panoramic roof, and using less premium sound systems. The company will also offer basic paint colours to save costs on the exterior.
Tesla's VP of vehicle engineering, Lars Moravy, stated that the affordable cars will resemble the existing models, while Tesla's CFO, Vaibhav Taneja, confirmed that they will be built on Tesla's existing lines.
This strategy reflects Tesla's response to growing competition from cheaper Chinese electric vehicles and recent financial pressures, including tariff costs and declining sales. By offering more affordable options, Tesla aims to increase accessibility to its EV technology while maintaining its market position.
Tesla executives discussed the approach to EV affordability during an investors' call, admitting that production of the cheaper EVs might have been delayed but assuring that no major hurdles remain. The number of different form factors that can be produced on existing lines is limited, as explained by Tesla's CFO.
The affordable cars, as indicated, will be available for purchase in Q4 2025. Tesla's move towards more affordable EVs is a significant step in making electric vehicles accessible to a wider audience, potentially accelerating the transition towards a sustainable future.
- Tesla's efforts to produce more affordable electric cars are driven by cutting production costs of its existing Model 3 and Model Y vehicles by approximately 20%.
- In line with this, Tesla plans to release a simplified Model Y, internally codenamed E41, priced at around AUD 47,000, featuring a smaller body and less costly components like basic paint colors.
- To achieve this affordable price point, Tesla will strip back features such as the rear touchscreen, ventilated seats, panoramic roof, and use less premium sound systems.
- The affordable Tesla cars will be manufactured on existing lines, maintaining a similar fundamental design to the existing models, in response to growing competition from cheaper Chinese electric vehicles and recent financial pressures.
