Tesla is delaying the release of its anticipated lower-cost EV by several months, according to Reuters. The planned model, a simplified version of the Model Y, was initially expected in the first half of the year but has now been postponed in the United States.
Tesla has planned to launch more affordable vehicles in the first half of the year to revive sluggish sales. According to sources, U.S. production of the budget-friendly Model Y, known as E41, is now expected to begin later than initially scheduled, between the third quarter and early next year.
According to sources, the initial launch will prioritize U.S. customers, with a production target of 250,000 vehicles. These will be built in the United States using existing Model Y assembly lines.
The E41’s launch in China is now expected to occur later in 2026, with plans for European production under consideration, though no exact timeline has been confirmed. The new model’s manufacturing costs are projected to be around 20% lower than the best-selling Model Y.
Tesla experienced its first-ever drop in annual deliveries last year, with a 13% decline in sales during the first quarter of 2025 due to an aging lineup. The most affordable Tesla currently available is the Model 3 Long Range AWD, with a starting price of $44,130.
Tesla is also preparing to introduce a more basic version of the Model 3. While specific details remain unclear, this streamlined variant will likely be based on the rear-wheel-drive model.
Tesla is likely to implement cost-cutting measures, including swapping leatherette ventilated seats for cloth, reducing the number of speakers, and making other efficiency-driven adjustments similar to those seen in the base Cybertruck.
The company has remained silent on production delays or targets. Automakers like Tesla face rising costs and supply chain issues, worsened by a 25% tariff on imports under Trump.
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