The delayed release of Tesla’s affordable Model Y model creates additional problems for CEO Elon Musk. Sources indicate to Reuters that the delay extends Tesla’s production timeline “at least months” past their initial public targets but the company has not disclosed their new timeline. The company maintains its goal to manufacture 250,000 units of the E41 Model Y in the U.S. before expanding production to China and Europe.
The production of a basic Model 3 version is underway but Reuters failed to disclose any pricing information. The Model Y begins at $50,630 while the Model 3 starts at $44,130 before customers claim their tax credits.
Tesla has demonstrated variable success in producing affordable electric vehicles throughout its history. The April 2024 Reuters article stated Tesla would stop developing a $25,000 EV to focus on its robotaxi initiative although Musk denied these reports at first. Musk stated during the November 2024 earnings call that a $25,000 Tesla model would be pointless because autonomous vehicles will define the future of transportation.
The combination of weak sales performance and new tariffs creates additional difficulties for Tesla. The company achieved its first annual sales decline in more than ten years during Q1 2025 by delivering 336,681 vehicles which represented a 13% decrease from Q1 2024 and exceeded a 20% decrease from Q1 2023. Tesla faces major obstacles in its transition to affordable EVs because of substantial market tariffs.
