Tesla has said that it will begin shipping a lower-priced edition of its best-selling Model Y SUV in the fourth quarter of 2025. The move, announced by chief executive Elon Musk, also comes as the electric car company crosses a long-anticipated threshold toward a full-fledged industrial behemoth on the back of rapid growth in global sales and revenue.
The cheaper Model Y is basically the existing version with all the extras removed, and aimed at ensuring the popular EV is within reach of more buyers. The move comes after a period of tumbling sales for Tesla, with global deliveries down 13.5% in the second quarter of 2025 and revenue from the sale of automotive regulatory credits decreasing 51%. First builds of this lower-cost model are said to have entered production in June 2025.
This is a departure from Tesla’s previous plans for a brand-new, “€25,000” budget car. The company will not be creating a new platform and will instead use its current Model Y production lines, some of which have been “meaningfully underutilised” because of demand bottlenecks. Specific changes aren’t described in detail, but the idea is to lower prices by substituting cheaper materials and limiting features, such as the rear screen.
The Model Y, which was the world’s top selling car in 2023, has lost sales momentum as competition, especially from Chinese EV makers, has heated up and demand for EVs has generally tailed off in some markets. In the United States, sales of the Model Y dropped 15 percent year-over-year in the second quarter of 2025.
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The new, relatively affordable Model Y is an attempt to reverse that direction. Yet, there is no word from the company about the particular pricing or the markets in which the new variant will be launched. As of now, the 2025 Model Y has a starting price of around $46,630 in the US and was recently introduced in India at Rs 59.89 lakh (ex-showroom).
Key specs for the existing 2025 Tesla Model Y Long Range AWD:
- Range (EPA est.): Up to 327 miles
- Acceleration (0-60 mph): 4.6 seconds
- Cargo Space: 76 cubic feet
- Seating: Up to 5 adults
- Screen: 15.4-inch center touchscreen, 8-inch rear touchscreen
The new cheaper Model Y is meant to increase the sales, but to achieve long-term growth in a market that’s becoming more crowded, Tesla may eventually need more variation in its car lineup, analysts say.