Tesla has confirmed it has started production of its cheapest model yet in the United States (US). The announcement came during an earnings call where the electric vehicle (EV) brand confirmed its largest quarterly financial loss in more than a decade. According to Tesla, production of the cheaper model – expected to cost around $US35,000 ($A53,000) – started in June, ahead of sales beginning in the US later this year. Australian arrivals are yet to be confirmed. “We started the production of the lower-cost model as planned in the first half of 2025,” said Tesla chief financial officer Vaibhav Taneja. “However, given our focus on building and delivering as many vehicles as possible in the US before the EV credit expires, and the additional complexity of ramping a new product, the ramp will happen next quarter slower than initially expected.” Cheaper Tesla production starts: could a sub-$50k Tesla be sold in Australia? Further details of the vehicle are still to be announced, however Tesla CEO Elon Musk said during the call “it’s just a Model Y”. It’s not clear if an upcoming, more affordable Model Y for China – codenamed E41, and set to enter production in 2026 – is the same vehicle. This cut-price version of the Model Y – the best-selling EV in the world and Australia in 2024 – is reportedly intended to battle more affordable rivals from Chinese brands such as BYD. It will reportedly be around 20 per cent more affordable than the existing Model Y. The mid-size SUV in Australia currently starts at $58,900 before on-road costs. A 20 per cent saving would bring the entry-level Model Y price down to $47,120 before on-road costs in Australia. Tesla was reportedly working on a completely new, lower-priced EV – said to be named ‘Model 2’ – as part of Mr Musk’s long-term goal to make electric cars affordable with a “low-cost family car” announced in 2006. The Model 2 was aimed to drive sales growth amid an increasing number of EV competitors and capitalise on lower production costs as EV production spread globally. Production was scheduled to begin in the second half of this year, however reports early last year indicated the project had been scrapped. The automaker launched its robotaxi service in June in the US city of Phoenix, Arizona, with Mr Musk expecting significant growth to occur – including plans to offer its Cybercab robotaxi for sale to fleets and private buyers. The Cybercab is a purpose-built autonomous vehicle with a focus on lower-cost per-mile driving, which may have been a basis for the previous ‘Model 2’. This includes a reduced top speed, which Mr Musk said enables cheaper tyres and other lower-cost parts for a more affordable price. Mr Musk suggested owners of Tesla cars – and even EVs made by other automakers – could provide owners a revenue source by serving as robotaxis when the owner doesn’t need them. “I mean, the fundamentally … biggest obstacle remains … people don’t have enough money in the bank account to buy it [the robotaxi]. Literally, that is the issue – not a lack of desire, but a lack of ability – so the more affordable we can make the car, the better,” he said.
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