Source: Sugar Design

Tesla’s long-rumored budget-friendly electric vehicle has reappeared in the spotlight, with new spy photos suggesting that the company is moving forward with an affordable model based on the Model Y.

This development comes after Tesla reportedly abandoned its previous plan for a low-cost EV, known as the Model 2, which was expected to launch at a price of $25,000. That project was shelved in April 2024, as Tesla shifted its focus toward autonomous robotaxis.

A New Approach to Affordability

While the Model 2 was expected to be built on a new platform, Tesla’s latest budget EV—internally codenamed E41—appears to be a modified version of the Model Y.

The decision to repurpose an existing model rather than develop a new one from scratch is likely aimed at reducing research and development costs.

Spy photos of the E41 reveal a lower-profile coupe-SUV design, distinct from the standard Model Y. The rear section remains heavily obscured, but hints of a full-width taillight design, consistent with the “Cyber” design language seen in the Cybertruck, Cybercab, and newest Model Y Juniper.

Cost-Cutting Measures

To achieve a lower price point, Tesla is reportedly making several modifications to the E41. The battery size is expected to be reduced to 50kWh, along with smaller tires, ensuring that the range remains around 500km.

The vehicle will feature single-layer glass instead of the double-layer soundproof glass used in the Model Y. The panoramic glass roof will be replaced with a metal roof, which may be a welcome change for drivers who find excessive heat uncomfortable.

The electric trunk will be eliminated in favor of a manual version. The number of speakers will be reduced, leading to a more basic audio system.

Leather seats will be replaced with fabric upholstery, potentially altering the feel of the interior. Additionally, the rear screen will be removed, and seat ventilation and heating will no longer be included.

Projected Pricing and Market Impact

With these adjustments, Tesla’s new budget EV is expected to be priced between 150,000 and 170,000 yuan (approximately $21,000 to $24,000 USD).

If launched in China, the model could bolster demand, where affordability plays a crucial role in consumer decisions.

Tesla’s shift from the Model 2 to the E41 suggests a strategic pivot—rather than investing in an entirely new platform, the company is leveraging existing technology to bring costs down.