Tesla suggested on social media that a new, lower-cost Model Y will be revealed on Tuesday, October 7, 2025. The company posted short videos online, one had a spinning metal part, the other showed narrow headlights in the dark.
Video 1
Video 2
These lights look the same as ones spotted on Model Y test vehicles near the Texas factory in recent weeks.
The teasers went up soon after the U.S. federal EV tax credit of $7,500 expired on September 30. Tesla may want to keep sales up as buying an EV is now less attractive without the credit. Releasing a cheaper car this week could help the company.
Design tweaks to lower price
Tesla calls this new car “E41” inside the company. Leaked code and firmware give many details about the Model Y Standard, which is the likely name for the car.
Outside, the car has a simpler look. It loses the LED light bar across the front; now, it gets clear-cut headlights, like the Model 3.
The car will come with 18-inch wheels with aero covers. The glass roof is gone, replaced by a black metal roof panel. These changes are all to reduce costs.
Interior changes
Inside, the cost-cutting is easy to spot. Cloth seats are in, no more vegan leather. The touchscreen for people in the back is out, as are electronic rear air vents (now manual). The company also made the center console easier and took away the more expensive ambient lighting.
A basic sound system with 10 speakers is used instead of the regular 15 speakers in higher trims. The steering wheel is now adjusted by hand. Puddle lights and power-folding mirrors were dropped.
Price matters most. The Model Y Standard is expected to start at $39,990 in the U.S. This is $5,000 cheaper than the Long Range RWD base model. Some say the price gap is a bit small since many features are missing.
Tesla thinks it can make this version about 20% cheaper to build than the refreshed Model Y and still keep profits up. The company is targeting 250,000 units per year in the U.S. by 2026.
Tesla expects to use its current U.S. factories to quickly start making the affordable Model Y. In June 2025, Tesla said the first versions were already coming off the line, with sales set for late 2025. Production will build up in Texas, then expand to other plants, including Shanghai and Berlin.
In China, Tesla has a lot of competition from local brands. The Shanghai plant will make the E41 model for China in 2026.
Tesla has not tried to sell an EV at this price point since the Model 3 launch. Industry watchers are waiting for Tuesday’s announcement for final prices, on-sale dates, and any other model versions. The company’s stock just went up 2% before markets opened after the teasers.
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