Tesla is reportedly working on a lower-cost vehicle to compete in the Chinese EV market. According to a recent Reuters report, the new model will first be built at Gigafactory Shanghai.
Production and Design
Sources told Reuters that the upcoming model is based on the Model Y. The project, internally called “E41,” will be produced using Tesla’s current manufacturing lines. Mass production is expected to start in 2026 at Gigafactory Shanghai.
The new vehicle will be smaller than the Model Y and will cost at least 20% less to manufacture than Tesla’s latest Model Y variant.
It won’t be limited to China, as production is also planned for North America and Europe.
Tesla’s Affordable Model Plans
Elon Musk briefly spoke about Tesla’s lower-cost vehicle during the Q4 2024 earnings call. He said,
“Tesla is still on track to launch a more affordable model in the first half of 2025 and will continue to expand our lineup from there.”
So far, Tesla has not shared details about this new model. This has led to speculation that it may just be a simplified version of the Model 3 or Model Y, which are the company’s best-selling cars.
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