Tesla plans lower cost Model Y

A low-cost version of the Tesla Model Y will be built in Shanghai from 2026, mainly for the China market.

Reuters reports sources saying that, adding a version will also be built in Europe and North America.

Tesla is developing the model under a project codenamed “E41” and will build it using existing production lines, the sources tell Reuters, which adds the EV will be smaller and cost at least 20% less to produce than the refreshed Model Y launched late last year.

The people declined to be identified as the project is confidential and Tesla did not respond to a request for comment, says Reuters.

Tesla chief executive Elon Musk said in January that Tesla would introduce lower-cost models in the first half of 2025 but he didn’t give details on the size of cost reduction, pricing, size or specification.