Elon Musk, CEO of Tesla, has said that the company’s next entry-level model will be a simpler version of the Model Y SUV. Tesla says that this new model will go on sale in the fourth quarter. Production is scheduled to begin in June and is expected to gain momentum by the end of the year. We don’t know the exact price or specs, but we think it will start at around $30,000. It might have a smaller battery and fewer parts inside. Tesla has been exploring the idea of a more affordable, entry-level car for years. Even though Tesla announced in April that it would start producing this type of car in June, we still didn’t know what to expect from this more affordable Tesla. During the company’s 2025 second-quarter earnings call, Elon Musk, the CEO, gave a more detailed explanation of the shape of this new model. This proved that production had begun. Musk said, “It’s just a Model Y,” which corroborated a previous report. It was said that Tesla was working on another affordable car, possibly called the Model 2, but a Reuters story from April 2024 said that the project had been shelved. There were, however, persistent rumors of a cheaper Tesla. Some said it wouldn’t be a different car, but rather a simpler version of an existing Tesla. We can now be certain that this base-level Tesla will simply be a less luxurious version of the company’s best-selling Model Y, which currently costs $46,630. Tesla’s earnings report for the second quarter states that “initial production” commenced in June and that “volume production” is expected to increase in the second half of the year. Lars Moravy, Volvo’s Vice President of Engineering, mentioned during the call that full-scale production wouldn’t begin until late 2025. It was also said that the new Model Y version would be “available for everyone” beginning in the fourth quarter. Currently, we don’t know the price of the more affordable Model Y. We think it will be very challenging for Tesla to get the Model Y under $30,000. This is because the SUV’s interior is already very simple. Long-running reports about a possible “Model 2” said that the base price would be $25,000. New figures indicate that it will cost 20% less to build than the current Model Y, so we estimate the price of this model to be around $30,000. We don’t think it would be unusual to see a smaller battery, an electric motor with less power, and more affordable parts inside. Over the next few months, more information should be readily available.
