Tesla delays production of affordable Model Y without explanation

Tesla has delayed the launch of more affordable electric vehicles, including a stripped-down version of the Model Y codenamed E41, previously scheduled for the first half of 2025, Reuters has learned. The sources said the launch dates were pushed back by at least three months. The reasons for the decision are still unknown.

Image Source: Tesla

Last month, Tesla reported plans to begin production of the Model Y E41 in China in 2026. According to Reuters sources, the electric car will have a more compact size compared to the base version, and its production cost will be 20% lower than that of the updated Model Y crossover. The release date of the budget version of the Model Y E41 in Europe is still unknown.

Producing cheap “people’s” electric cars should become a major focus for Tesla after its weakest quarterly sales since 2022. Its deliveries fell to a three-year low in the first quarter of 2025, and its market share fell from more than 75% in 2022 to less than 50% in 2024.

The company is set to report earnings next Tuesday to investors who will be scrutinizing plans for new models. In light of weak sales, shareholders may press CEO Elon Musk to respond to criticism that his political activities continue to hurt his business, Bloomberg reports.

Automakers are currently taking steps to mitigate the impact of Donald Trump’s 25 percent tariffs on cars and auto parts imported from outside the U.S. That will inevitably impact prices and potentially disrupt the supply chain.

Tesla has increased North American parts supplies for many models over the past two years, sources told Reuters, which will reduce the company’s reliance on tariffs for the E41. The company recently shelved plans to ship parts from China to the U.S. for the Cybercab and Semi models because of rising tariffs.