Tesla delays affordable Model Y release until 2026
Photo: In 2026, Tesla plans to produce 250 thousand of the cheaper Model Y (Getty Images)
Tesla had planned to release a more affordable version of its popular Model Y electric crossover in the United States. However, the launch has been delayed, according to Reuters.
Tesla had earlier promised to introduce budget-friendly vehicles in the first half of 2025. That move could have boosted the company’s declining sales. According to sources, global production of the lower-cost Model Y, internally known as E41, was expected to begin in the US. However, the launch has been pushed back by at least several months compared to previously announced public plans. The new timeline points to the third quarter of this year or the beginning of next year.
Two sources said Tesla plans to produce 250,000 budget Model Y vehicles in the US in 2026. The company also intends to manufacture new vehicles in China and Europe in the future, as previously reported by Reuters. The delay in US production had not been disclosed until now.
Last month, the news agency reported that the E41 would launch in China in 2026. Sources familiar with Tesla’s plans in China told Reuters the E41 will be smaller and 20% cheaper to produce than the updated Model Y. The timeline for the European launch remains unclear.
Three other sources said Tesla is also preparing to release a simplified version of its compact Model 3 sedan.
Tesla fans and investors have long anticipated more affordable models, hoping they will attract new buyers and help reverse the decline in sales and the company’s shrinking share of the electric vehicle market. Tesla has also refreshed its original Model Y with changes to both the exterior and interior. The Long Range all-wheel drive version currently costs around $49,000 in the US, before applying the $7,500 federal tax credit.
Notably, on January 2, Tesla reported its first annual decline in deliveries last year. Analysts expect sales to fall again this year for several reasons. Among them is reputational damage linked to Chief Executive Officer Elon Musk’s close ties to US President Donald Trump and his support for far-right European politicians.
Another challenge for the company is that its vehicle lineup is aging, and it lacks relatively affordable models.
Tesla halts sales in China
Last week, Tesla stopped taking new orders for its Model S and Model X vehicles on its Chinese website. The move comes amid a growing trade war between the US and China.
