Tesla has announced plans to launch a more affordable version of its popular Model Y electric SUV later in 2025. Tesla faces a 13% decline in sales and a 16% drop in revenue in Q2 2025, exacerbated by reduced EV incentives in key markets, such as the US.
Key Features
The cheaper Model Y will retain the core design of the standard model but with cost-saving modifications, such as cloth seats instead of leather, manual seat adjustments, basic plastic hubcaps, and simplified exterior lighting without matrix headlights or light bars. Interior luxuries like ambient mood lighting, HEPA air filtration, and the rear passenger display may be omitted to lower costs. Safety and tech essentials, including multiple airbags, a 360-degree camera, and basic ADAS features like forward collision warning, will remain, though options like Full Self-Driving will be limited. The vehicle will use a more economical battery setup, potentially with LFP cells for reduced costs.
Interior & Technology
Inside, the cabin will emphasise minimalism with an all-black theme as standard and a 15.4-inch central touchscreen controlling most functions, including navigation and entertainment via Tesla Theatre for streaming services. Soft-touch materials might be dropped to lower costs, too.
Conclusion
Unlike the full-featured Model Y, which includes leather interiors, automated adjustments, and comprehensive FSD hardware starting at Rs 59.89 Lakh in India (ex-showroom) for the RWD variant, the cheaper version prioritises cost reductions. It could perhaps help Tesla compete with Hyundai-Kia & BYD. The variant is part of Tesla’s strategy to address market conditions, with production planned for facilities including Gigafactory Texas. Deliveries are anticipated in early 2026 in markets like the US and Europe.
