Tesla, with an earnings report looming tomorrow, appears to have delayed yet again its efforts to produce a vehicle less expensive than its current lineup. According to media reports, the company will not produce an inexpensive version of its best-selling Model Y SUV as soon as planned.
Reuters was first with the news, citing “three sources with knowledge of the matter.”
Reuters says the planned model isn’t dead. However, production will begin “at least a few months later than outlined in Tesla’s public plan.” Sources offered “a range of revised targets from the third quarter to early next year.”
Sales Slumping Now, But Peak Came Two Years Ago
Tesla has endured a worldwide sales slump early in 2025, with CEO Elon Musk’s involvement in politics in multiple countries triggering controversy unprecedented for an automaker. Protesters now routinely appear at Tesla storefronts and factories in the U.S. and Germany.
However, Tesla’s sales decline began earlier than Musk’s White House prominence. Tesla sales peaked in February of 2023 and have never recovered. Even apart from Musk’s contentious image, Tesla suffers from an aging product lineup and intensifying competition as nearly every other automaker on the planet goes electric.
Inexpensive Models Have Proven Elusive for Tesla
The company followed a simple business model for most of its existence, but deviated from it after 2023.
Tesla began by building expensive luxury cars like the Model S sedan and Model X SUV, then introduced more mainstream models like the Model 3 and Model Y. Sales of higher-priced models paid for research, development, and tooling for less costly cars.
The plan long called for a car with a roughly $25,000 price tag, the Model 2. But Musk canceled Model 2 development last year. He focused the company instead on a Robotaxi and further development of its automation software.
Musk took to telling investors Tesla was now an automation company, not a car company. He opened its walled-garden charging network to use by other brands, ending a key sales advantage Tesla once held over other electric vehicle (EV) makers.
Rumors said the company would still aim to produce a less-expensive model by modifying its Model Y to use a lower-range lithium iron phosphate battery. This model is sometimes called the Model Q, though the company has never confirmed that moniker.
A Cheaper Tesla Is Still Possible
At least one lower-cost car may still be in the works. Carscoops reports, “plans are underway to introduce a stripped-down Model 3 to the market as well. While details remain unclear, this more basic version will likely be based on the rear-wheel-drive model.”