Tesla Pushes Back Affordable Model Y Release Until 2026

Tesla intended to introduce a cheaper variant of its widely sought-after Model Y electric SUV in the U.S., but the rollout has been pushed back, as reported by Reuters.

Earlier, Tesla committed to launching more affordable cars during the first half of 2025. This initiative might have helped improve the firm’s falling sales figures. Sources indicate that manufacturing of the less expensive Model Y, referred to within the organization as E41, was slated to start in the U.S. But now, the introduction has been delayed by multiple months from what was initially disclosed publicly. The revised schedule suggests that production will commence sometime between late summer this year and early next year.

According to two sources, Tesla aims to produce around 250,000 affordable Model Y cars in the U.S. by 2026. As mentioned earlier by Reuters, the firm also plans to start producing new models in both China and Europe down the line. This postponement of U.S.-based manufacturing was not publicly announced before.

A month ago, the news organization stated that the E41 was scheduled to debut in China in 2026. According to sources well-versed in Tesla’s strategies within China, shared with Reuters, the E41 will be more compact and could cost up to 20% less to manufacture compared to the refreshed Model Y. As of now, the schedule for its release in Europe has yet to be determined.

Three other sources said Tesla is also preparing to release a simplified version of its compact Model 3 sedan.

Fans and backers of Tesla have eagerly awaited more budget-friendly options, expecting these models to draw in fresh customers and aid in reversing falling sales figures as well as the brand’s diminishing presence in the electric vehicle sector. Additionally, Tesla has updated its initial Model Y by making alterations to both its external appearance and internal design. At present, the Long Range dual-motor variant retails for approximately $49,000 within the U.S., not accounting for the potential reduction from the available $7,500 federal tax incentive.

Notably, on January 2, Tesla reported its first annual decline in deliveries last year. Analysts expect sales to fall again this year for several reasons. Among them is reputational damage linked to Chief Executive Officer Elon Musk’s close ties to US President Donald Trump and his support for far-right European politicians.

A significant hurdle for the company is an outdated range of vehicles, coupled with the absence of more budget-friendly options.

Tesla stops sales in China

A week ago, Tesla ceased accepting new orders for their Model S and Model X cars on their Chinese web platform. This action follows an escalating trade conflict between the U.S. and China.