Tesla Postpones Launch of Budget-Friendly Model Y, Report Says

Prospective buyers hoping for a more affordable Tesla Model Y will have to wait a while longer. According to a new Reuters report, the production timeline for Tesla’s long-promised entry-level Model Y has been pushed back, with U.S. manufacturing now expected to begin between Q3 2025 and early 2026.

The Model Y, Tesla’s global best-seller in both 2023 and 2024, received a significant upgrade for the 2025 model year. Known internally as “Juniper,” the refreshed version includes updated styling, tech enhancements, and performance improvements. Currently, however, only the Long Range All-Wheel Drive variant is available, starting at $50,630 before incentives. That’s far from the elusive $25,000 Tesla often teased in the past.

Reuters reports that the more affordable Model Y, known internally as the E41, was initially scheduled to enter production in the first half of 2025. But as with many Tesla timelines, the target has shifted.

“People familiar with the project told Reuters that the automaker has a target to produce 250,000 units of the E41 Model Y in 2026.”

This production figure applies to vehicles built in the United States. For context, Tesla rolled out nearly 1.68 million Model 3 and Model Y units globally in 2024.

The final pricing remains unclear. While a $25,000 Tesla continues to be a talking point—more myth than reality for some—there have been glimpses of budget Teslas on the used market. Rental giant Hertz, for example, has sold older Model 3 units for as little as $14,000.

If the E41 is indeed smaller and reportedly 20% cheaper to produce than the current Juniper Model Y, a price tag closer to that of today’s Model 3 may be achievable. Additionally, a stripped-down Model 3 variant is said to be in development, which could offer another affordable EV option outside the used market.

The E41 Model Y is also expected to launch in China and Europe. While China’s release is targeted for 2026, there’s no official timeline for Europe yet. Continued trade tensions and tariffs—like those recently impacting shipments of Chinese components for the Cybercab and Semi—could influence that schedule.

Investors and consumers alike are keeping a close eye on Tesla’s next moves, hoping that lower-cost models could boost sales and revive interest. Whether these ambitions turn into real-world production remains to be seen.