Tesla to delay launch of affordable EV, a lower-cost Model Y

Tesla cites flagging sales as one of the reasons to launch an affordable model.

US EV maker Tesla has big plans to launch affordable models in its portfolio. These include a stripped-down version of its best-selling electric SUV, the Model Y. However, reports now suggest that the launch has been delayed.

Tesla cites flagging sales as one of the reasons to launch an affordable model. The carmaker expects this to give a potential boost to sales. Global production of the lower-cost Model Y, internally codenamed E41, is expected to begin in the United States, sources said. This is expected to happen a few months later than what Tesla outlined in its public plan, and the revised launch target could be anywhere from the third quarter of this year to early next year. 

Sources in the know also said that Tesla aimed to produce 250,000 of the cheaper Model Ys in the United States in 2026. The new car is also expected to begin production in China and Europe eventually.

The affordable Tesla models have been widely anticipated by fans of the brand and investors hope they will attract a fresh group of customers and turn around the EV maker's falling sales and eroding market share. Tesla recently gave the original Model Y a refresh.

The cheaper E41 is expected to launch in China in 2026. It will be smaller and will cost 20 percent less to produce than the original Model Y. Tesla is also planning to launch a stripped-down version of its Model 3 compact sedan.

Tesla has not commented on the delay in production of the cheaper Model Y and production targets.

Tesla reported a decline in deliveries last year on Jan 2, and sales are expected to fall further due to various reasons. These include  Elon Musk's close work with U.S. President Donald Trump and support of far-right European politicians.

The other challenge for Tesla is that its vehicles are ageing and there is no relatively cheap model. Musk had earlier promised a new, cheaper EV platform with cars to be priced as low as $25,000. This plan was dumped to prioritize robotaxi development.

Tesla also recently suspended shipment of components from China to the United States for its Cybercab and Semi truck due to tariffs.

Source: Reuters