Musk: More affordable Tesla will be “just a Model Y”
It was a somewhat surprising announcement in Tesla’s Q2 report, as the company rarely mentions new models in such documents – this is usually left to Musk himself. But in the first summary, it stated: “We continue to expand our vehicle offering, including first builds of a more affordable model in June, with volume production planned for the second half of 2025.”
The prospect of a new entry-level Tesla this year attracted attention, given longstanding rumours. Some suggested development was scrapped in favour of the steering-wheel-free Cybercab; others claimed it would simply be a cheaper version of the Model Y.
During the investor call, Musk confirmed the latter. When an analyst asked what the car would look like, he replied: “It’s just a Model Y. Let the cat out of the bag there.”
Tesla’s announcement raises further questions
While Musk clarified one aspect – a stripped-down Model Y seemed likely anyway, especially since Tesla confirmed in the same report that the Cybercab, due in 2026, will be its first vehicle built using the new “unboxed” manufacturing strategy. The “more affordable model”, however, will arrive this year, with the first units already produced and volume ramp-up planned for late 2025, as development chief Lars Moravy confirmed. This will be before the “unboxed” production begins next year.
However, Tesla’s clarity creates other questions – not about the model name, which remains a secret, but about how much it will differ from the Model Y in design, technology, final customer price, and especially production costs. Will the stripped-down Model Y attract customers and boost sales? Or are the differences so minor that Tesla risks cannibalising its own bestseller by offering a nearly identical but cheaper alternative?
Years ago, Tesla promised a $25,000 EV – a model yet to reach market. Whether a pared-down Model Y can achieve this price remains doubtful. Currently, the Model Y Long Range RWD starts at $44,490 in the US, excluding the federal tax credit that will expire at the end of September. The cheaper LFP-battery base model was dropped because its Chinese-imported batteries became unviable under new tariffs. The industry consensus remains that genuinely affordable EVs require LFP cells, and most volume models will rely on this chemistry. Tesla has not yet revealed which battery it will use to build its cheaper US model.
Interestingly, Tesla announced in its quarterly report that it will begin producing its own LFP cells later this year – but these are intended only for stationary storage systems such as Powerwalls and Megapacks, not for vehicles.
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