The Affordable Tesla Is Almost Here—and We Know Its Design
The Affordable Tesla Revealed
During a recent quarterly earnings call, Elon Musk, the CEO of Tesla, finally shared details about the long-anticipated low-cost vehicle. For years, Tesla and Musk have hinted at a budget-friendly model without giving specific information on its design or price. However, during the second-quarter 2025 earnings call, Musk confirmed that the affordable Tesla is indeed coming and provided some insights into what it will look like.
Surprisingly, the new model isn’t an entirely new vehicle but rather a version of the Model Y. Currently, the least-expensive Model Y is the single-motor Long Range variant, which isn’t the cheapest option available. The entry-level single-motor Model 3 sedan holds that title. So, how will Tesla make the Model Y more affordable than the Model 3?
Musk didn’t provide all the details, but here’s what we can expect. The upcoming Model Y is likely to be stripped of many premium features. This could include cloth seats instead of leather, no rear-seat screen, a smaller or less expensive battery, a downgraded infotainment system, no heated rear seats or rear ventilation, no active noise cancellation, no HEPA cabin filter, and no 120-volt outlet. There are also discussions about reducing the use of silicon carbide and rare earths, possibly due to the absence of a front motor. Additionally, there may be a lower-powered version of the current Model Y's rear motor. While there’s no official word on steel wheels and unpainted bumpers and trim, these features could be included.
Musk argues that the Model Y is the most desirable vehicle in Tesla’s lineup, making it an ideal candidate for a low-cost variant. By taking a popular model and making it cheaper, Tesla aims to attract a broader customer base. According to Tesla, this budget Model Y has been in production since June, with an imminent on-sale date set for the third quarter of the fiscal year.
Other Exciting Developments
The affordable Model Y was the main highlight of the earnings call, but there were several other notable updates. As usual, Musk and Tesla emphasized their focus on autonomy and the development of their robotaxi service. The company plans to expand the size and scope of its robotaxi service in Austin, Texas, and is considering San Francisco as the next location. Robotaxi testing is already underway in the Bay Area, as well as in Arizona and Florida.
Tesla aims to reduce the cost-per-mile of its robotaxi service once the Cybercab is launched. Standard robotaxi vehicles will remain more expensive than the Cybercab but will be built differently, featuring longer-life tires, a smoother ride, and a significantly lower top speed. The company expects its robotaxi service to grow substantially in 2026 and have a significant impact on Tesla’s financial performance, especially given the recent decline in auto revenue and overall income.
Financial Challenges and Future Outlook
Tesla’s poor financial performance is partly attributed to the revocation of the Federal EV tax credit, tariffs affecting material costs, and the loss of various tax credits impacting its energy storage business. Musk’s controversial involvement in politics and government has also affected sales, causing some potential buyers to hesitate. Musk acknowledged these challenges, even expressing concerns about being removed as CEO due to activist shareholders.
With the recent quarter being the worst since 2021 and Q1 2024, there are plenty of issues for Musk and the company to address. Despite these challenges, Tesla remains focused on innovation and expansion, particularly in the autonomous vehicle and robotaxi sectors. The upcoming affordable Model Y is a crucial step in this strategy, aiming to attract more customers and improve the company’s financial outlook.