You might need to wait additional time for a less expensive Tesla Model Y.

      It's been some time since Tesla rejuvenated its long-awaited Model 3 electric vehicle, subsequently introducing an updated Model Y in its domestic market. However, reports indicate that the company's anticipated plans for a more economical SUV to be produced in the US have encountered a delay.

      As per Reuters, Tesla aimed to manufacture approximately 250,000 units of the less expensive Model Y variant by 2026. That timeline has now been adjusted, and there is uncertainty regarding the revised launch plans for this vehicle, currently under development with the codename E41.

      “Global production of the lower-cost Model Y, internally codenamed E41, is expected to commence in the United States, according to the sources. This will occur several months later than outlined in Tesla’s public schedule, with revised timelines ranging from the third quarter to early next year,” the report states.

      What can we anticipate from a budget-friendly Model Y?

      Christian de Looper / Digital Trends

      The simplified Model Y variant is expected to have a smaller size and is projected to be priced 20% lower. For context, the Long Range All-Wheel Drive (AWD) version of the Model Y currently retails for $41,490 in the US, factoring in the federal tax credit of $7,500.

      According to the report, the upcoming vehicle might be priced slightly below $40,000 before tax credits are considered. With such pricing, Tesla would directly compete with brands like Hyundai, Kia, Chevrolet, Toyota, Volkswagen, and Ford.

      Significantly, Tesla has reportedly increased its local sourcing of parts over the past few quarters, which suggests that if the company proceeds with mass production of the Model Y “E41” variant, the impact of tariffs would be less significant. However, the current situation remains unstable as Tesla has experienced a notable decline recently.

      Christian de Looper / Digital Trends

      The company's market share in California, one of the largest EV markets in the nation, fell below 50% in the first quarter of 2025. “An outdated product lineup and backlash against Elon Musk’s political actions are likely key reasons for the decrease in Tesla's BEV market share,” commented the California New Car Dealers Association regarding the drop.

      Aside from a more basic Model Y, the automaker is also focused on its Cyber Cab project. Interestingly, the Reuters report indicates that Tesla is developing “a simplified version of its Model 3.” The company was recently reported to be working on an affordable EV that could be as low as $25,000, but those plans have currently been put on hold.