Tesla is poised to introduce a more budget-friendly version of its best-selling Model Y SUV, a strategic move to counter its recent decline in sales and market share. The announcement comes as the electric vehicle pioneer faces intensifying competition on a global scale.
For years, CEO Elon Musk has championed the goal of a mass-market electric car, though the company notably scrapped plans last year for an all-new, $25,000 model. The vehicle anticipated this week is instead an “affordable” variant, engineered using Tesla’s existing manufacturing and design platforms to streamline production.
Over the weekend, the company stoked anticipation among its loyal fanbase by posting two cryptic clips on the social media platform X. One video depicted headlights emerging from darkness, while another showed a brief shot of a spinning wheel, culminating in the date “10/7,” indicating an October 7th announcement. In a departure from its typical flashy product launches, neither Tesla nor its key influencers have hinted at a live event. Despite this, industry analysts, investors, and enthusiasts are widely expecting a significant reveal.
— Tesla (@Tesla) October 5, 2025
The central questions surrounding this new model are its final price, driving range, and the specific cost-cutting measures Tesla has employed. Late last year, Musk indicated the vehicle would be priced below the “key threshold” of $30,000, a figure that included available U.S. federal EV tax credits. The expiration of those credits for certain models at the end of last month effectively raised prices by $7,500, a change that helped drive record quarterly sales but is expected to dampen growth for the remainder of the year unless this new, affordable car makes a timely entrance.
“The desire to buy the car is very high. (It’s) just (that) people don’t have enough money in their bank account to buy it,” Musk conceded during Tesla’s second-quarter earnings call in July. “So the more affordable we can make the car, the better.”
The timeline for this vehicle has also seen adjustments. Musk initially promised production would commence by the end of June, but in July, Tesla reported it had only completed the “first builds,” with customer availability projected for the final quarter of the year.
This launch is critical for Tesla, which has been navigating a slowdown in sales of its aging vehicle lineup. Rapidly expanding competition, particularly in key markets like China and Europe, has put pressure on the company. In Europe, Musk’s own far-right political stances have also been cited as a factor eroding brand loyalty.
In response to these challenges, Tesla introduced a refreshed Model Y earlier this year, featuring upgrades such as a new brake system and a rear touchscreen. Simultaneously, Musk has been steering the company’s long-term focus toward artificial intelligence, robotaxis, and humanoid robots. While Tesla has confirmed its intention to add more affordable vehicles to its lineup, detailed plans have been scarce. According to sources familiar with the matter, the automaker also intends to release a simplified version of its Model 3 sedan.
Brake system in New Model Y has the freedom to use either electric motor or mechanical brake when you push the brake pedal
— Tesla (@Tesla) March 3, 2025
This brings you maximum efficiency, consistency in pedal behavior & improved stability pic.twitter.com/rIwOUxwpXU
Ultimately, the success of these lower-cost vehicles is fundamental to Tesla’s audacious goal of selling 20 million cars over the next decade. This target is one of several operational and valuation milestones set by the company’s board, which is directly tied to a proposed $1 trillion compensation package for Musk.
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