Tesla’s rumored affordable electric vehicle may be hitting delays. According to a ‘exclusive’ Reuters report citing multiple unnamed sources, a lower-cost version of the Model Y—codenamed “E41”—won’t begin production in the U.S. until later than expected.
The company had previously said that its new affordable EVs would launch in the first half of 2025. But sources claim that timeline has quietly shifted, with production now expected to begin sometime between the third quarter of 2025 and early 2026. The reason for the delay is unclear.
Internally, Tesla is targeting production of around 250,000 of these cheaper Model Ys in the U.S. in 2026. Versions of the vehicle are also expected to be made in China and Europe. In China, production is reportedly set for 2026, with costs said to be 20% lower than the current refreshed Model Y.
The new vehicle would be smaller and more stripped-down than existing versions, which start at around $49,000 in the U.S. before tax credits. Tesla is also said to be working on a bare-bones version of its Model 3 sedan.
Elon Musk previously teased a $25,000 EV platform, but Tesla later shifted focus to its robotaxi project instead. As trade tensions rise, Tesla has reportedly increased North American sourcing for parts to avoid import tariffs, which could benefit the E41 rollout.
Tesla is scheduled to report its quarterly results on Tuesday. Investors will be watching closely for any updates on future vehicles and production plans. The timing of this report ahead of the earnings is also suspect, while Tesla CEO Musk has previously shot down Reuters reports as false. He has not commented on this one yet. Last year, Musk said “Reuters is lying (again)” when it reported Tesla had scrapped its plans for a low-cost car.
Earlier this month, Tesla did launch another version of the new Model Y, priced lower than the initial maxed-out Launch Edition. This new version is a Long Range AWD that starts at $48,990 USD.
