Tesla's leader issues a caution about challenging future quarters, with speculation centered on the Model Y as the sole new electric vehicle offering.
Tesla, the electric vehicle giant, has announced plans to launch a new, more affordable electric vehicle (EV) by the end of 2025. Contrary to previous rumours, this new model is expected to be a modified, more accessible version of the current Model Y, rather than an entirely new compact EV like the Model Q or Model 2.
The first builds of this more affordable Model Y variant were produced in June 2025, with volume production set for the second half of the year and an official unveiling likely in Q4 2025. Tesla CEO Elon Musk has indirectly confirmed the development of this new model, joking that it would look like the Model Y.
The decision to delay the volume ramp of the more affordable model is attributed to shifting market dynamics, such as the ending of US incentives in Q3 2025, and Tesla's current focus on maximising Model Y production. Initially, Tesla aimed for initial production in the first half of 2025, but the timeline has since been clarified.
Tesla's strategy of introducing affordable models based on the existing Model 3/Y platform aligns with their aim to compete better with lower-priced Chinese EVs and increase adoption through affordability. However, there is no evidence to support the launch of a brand-new compact EV separate from the Model Y derivatives (like the Model Q); instead, the affordable EV will be a modified Model Y.
In the financial front, Tesla's Q2 2025 profits and revenue significantly dropped compared to the same quarter last year, causing a 6% drop in Tesla's stock. CEO Musk also warned that there could be more challenging quarters ahead for Tesla. Despite this, Musk anticipates that Tesla's "economics" will be "very convincing" by the end of 2025.
Tesla's CFO Vaibhav Taneja has confirmed that the company will fund startup losses for its robotaxi service from its reserves. Some electric vehicles produced in June 2025 are reported to be more affordable models, but the management did not provide clear details about the appearance of the more affordable model during the conference.
In summary, Tesla's new, more affordable EV will be a modified, more accessible Model Y, with production set to start in the second half of 2025 and an official launch likely in Q4 2025. The company remains vague about the new models expected to help sales by the end of 2025, but the focus appears to be on affordability and competing with lower-priced Chinese EVs.
Tesla's plans to launch a more affordable electric vehicle (EV) by the end of 2025 are centered around a modified Model Y variant, which began production in June 2025. This development falls under the company's larger business strategy of increasing affordability to compete with lower-priced Chinese EVs and support broader adoption of their technology in the EV market.
