Tesla is reportedly planning to take out a more affordable version of the Model Y in China soon. According to Reuters, the new vehicle, codename E41, will be manufactured at the Shanghai Gigafactory and could make its debut by the end of this year or by early 2026.
More affordable Model Y: What to expect?
China, the world’s second-largest EV market, has become a reality check for Tesla as it continues to lose its market share both locally and globally. With competitors like BYD and Xiaomi gaining traction, Tesla faced another setback in February when production at its Shanghai plant was halted for upgrades to the new Model Y.
Based on the Reuters report, the low-cost Model Y will be priced around 20% less than the current model and will initially be sold only in China.
A Chinese media outlet, 36Kr, reported that with fierce competition brewing in the affordable EV segment, Tesla has decided to enter this market. The actual launch date of the low-cost Model Y will depend on the demand for the 2025 Model Y. If sales fall short, Tesla could roll out the new version as early as this year.
The report further reveals that the Model Y will later on be made and sold in the U.S. and Europe, but no timeline has been disclosed yet.The updated 2025 Model Y is available in two variants in China — rear-wheel-drive and all-wheel-drive. The crossover SUV made its debut in January and the deliveries commenced from February 26.Â
Is Tesla losing sleep over Xiaomi?
Smartphone giant, Xiaomi, stormed into the EV market last year with SU7, which has been a runaway success and even outsold Model 3 in December 2024. Xiaomi is now looking to hit Tesla where it hurts the most by soon launching a Model Y rival, the YU7. Based on a Reuters report, the YU7 will be launched this summer and will be available in three versions, boasting driving ranges of 770 km, 675 km, and 760 km on a single charge, based on the Chinese CLTC standard.
