Tesla's China team is Developing a "Low-Cost Version of the Model Y" with Costs Reduced by 20%

【PCauto】In response to fierce market competition, Tesla's China team is leading the effort to create a more affordable Model Y. Compared to the current Model Y, the expected production costs will be lower by 20%.

The new vehicle will undergo minimal changes to its battery, powertrain, and chassis. Development will follow a "depop" approach, meaning that while core functionalities remain intact, configurations will be simplified to facilitate a quick market launch, addressing competitors' price cuts and feature competition.

Previously, Tesla launched a stripped-down, lower-priced Model 3 in Mexico last August. However, this time, the low-cost Model Y is primarily led by the Chinese team. Additionally, Tesla has shifted from using English names for new vehicle projects to a letter-and-number format. This new vehicle’s development code is “E41.”

The E41 will be produced using Tesla's existing production lines and is expected to begin mass production in 2026. Cars produced in Shanghai will primarily be sold in China to protect Tesla's market share in the region. There are also plans for production in Europe and North America, but specific timelines have yet to be disclosed.

The launch timing for these new models will depend on the order performance of the refreshed Model Y. If the updated Model Y falls short of expectations, Tesla may introduce this "cheaper Model Y" in the second half of this year.

In China, during the first week of deliveries, over 6,000 units of the new Model Y were delivered, while compared to the usual 10,000 or more. Currently, Tesla's website shows the delivery cycle for the refreshed Model Y RWD standard range version is 2 - 4 weeks, while the long range version has a delivery cycle of 6 - 10 weeks. This recent order scale for the refreshed Model Y has not significantly exceeded Tesla's production capacity and forecasts, compared to the previous 1 - 4 weeks for regular delivery cycles.