- Tesla kicked off “initial production” of a more affordable electric vehicle in June, the company said on Wednesday.
- The automaker said the model should hit volume production in the second half of 2025.
- Tesla’s car sales have been sliding for months, underscoring the need for a fresh product. It’s still unclear exactly what the new model is.
Tesla started “initial production” of a long-awaited cheaper model widely seen as the cure to its sagging sales, the company said in its second-quarter earnings release on Wednesday.
Tesla completed the “first builds” of that model in June, and said it expects to kick off mass production of the new car in the back half of 2025.
“We continue to expand our vehicle offering, including first builds of a more affordable model in June, with volume production planned for the second half of 2025,” Tesla said.
On Tesla’s quarterly earnings call Wednesday afternoon, Lars Moravy, its vice president of engineering, indicated that production of the cheaper model won’t meaningfully ramp up until the end of the year. He said the company will “keep pushing hard on our current models to avoid complexity” in the third quarter, seeing as the EV tax credit is going away on Sept. 30. He said the more affordable model will be “available for everyone” in Q4.
What Is Tesla’s Cheaper Car?
What exactly that cheaper Tesla remains a mystery.
Under pressure from weakening sales of its core models, last year Tesla announced that it would launch new products, including “more affordable models,” in the first half of 2025. June came and went without an announcement or a new model reveal.
On recent earnings calls, Tesla executives have dodged questions about whether its upcoming cheaper models will be brand-new cars or variations of existing ones.
Tesla has said that the cheaper models will be built on the same production lines for the Model Y and Model 3. On its first-quarter earnings call, Moravy said that “the models that come out in the next months will resemble in form and shape the cars that we currently make.”
Why Tesla Needs A More Affordable Model
The nature of these cars is crucial to Tesla’s future. After years of rocket-ship growth, the electric automaker has lost steam due to stiffer competition and its CEO’s controversial politics. The company’s deliveries have dropped significantly this year, and it would need to string together a pair of record quarters just to match 2024’s figures.
Experts say it’s clear that new models, and especially lower-priced ones, are the only way for Tesla to get into growth mode again. Just look at the sprawling lineups of the world’s biggest auto companies like General Motors, Toyota and Volkswagen, all which sell four or five times as many cars annually as Tesla does.
Tesla, meanwhile, is extremely reliant on sales of the Model 3 and Model Y, which are popular but seem to have hit a ceiling. Its last brand-new model, the Cybertruck pickup, is niche at best and isn’t hitting nearly the 250,000 units per year that Elon Musk predicted. (Its sales dropped by about half last quarter, to around 4,300 units.)
The end of EV tax credits at the end of September will hit sales of all EVs. So that cheaper model can’t come soon enough.
Contact the author: Tim.levin@insideevs.com.
Updated 3:15 P.M. PST with comments from Tesla’s earnings call.
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