The Tesla Model 3 sedan and Model Y SUV have starting prices of $44,130 and $50,630, respectively. Considering their impressive electric driving range, strong performance, and responsive infotainment system, these prices appear to offer good value. Nevertheless, Tesla has been considering the development of a more budget-friendly EV. Despite reports last year suggesting that plans for a smaller, cheaper Model 2 had been abandoned, the automaker now confirms it will introduce a new entry-level model in June.
The announcement regarding the upcoming affordable Tesla came during the company’s first-quarter earnings call. During the call, CFO Vaibhav Taneja stated that production for the lower-cost Tesla is expected to begin in June. Although this timeline seems surprisingly soon for a model that has yet to be unveiled, Tesla explained that preparations for this new variant began alongside equipment updates needed for the refreshed 2025 Model Y.
While Tesla has yet to share many specifics about the new affordable model, indications suggest that it might be a simplified version of the Model Y rather than a completely new vehicle. Tesla explained that in order to maintain a low price point—reportedly targeting under $30,000, possibly including the EV tax credit—the new model would be produced on existing assembly lines. Given that Tesla was able to adjust its manufacturing equipment relatively easily while preparing for the new Model Y, it’s likely that the affordable EV will share many components with Tesla’s top-selling model.
It’s also possible that Tesla will introduce more than one entry-level EV, potentially one based on the Model 3 and another based on the Model Y.
During the call, Lars Moravy, Tesla’s VP of Vehicle Engineering, mentioned that “the models that come out in the next months will resemble in form and shape the cars that we currently make,” reinforcing the idea that the new vehicles will be simplified versions of current models. Moravy further added that the “flexibility of what we can do within the form factor and the design of it is really limited to what we can do in our existing lines rather than build new ones.” His use of the plural “models” also hints at the possibility of more than one new budget EV being launched.
Although the June production start date feels very soon, Tesla indicated that ramping up production will take time. As a result, it may be several months before the new affordable Tesla becomes widely available on the roads. This entry-level EV could prove vital for Tesla, especially after the company reported a 71 percent drop in profits during the first quarter compared to the same period last year.
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