Elon Musk confirms cheaper 2025 Tesla Model Y on the way to boost sales
Tesla supremo and walking headline Elon Musk has announced the controversial EV maker will soon launch a cheaper variant of the Model Y designed to claw back lost sales.
Confirming the trimmed-down 2025 Tesla Model Y during a call with investors, Tesla’s outspoken CEO was careful to not reveal any details of how it will cut costs from the current car.
Nor did he reveal how much will be sheared off the Y’s starting price.
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The announcement of the cheaper Model Y follows on from the recent reveal of the three-row Tesla Model YL and that work is underway on an extended range Model 3. Links to stories on those two new models are above.
In Australia, the cheapest Tesla Model Y rear-wheel drive is priced from $58,900 plus on-roads.
That means it remains priced at a premium over the likes of the Kia EV5 ($56,770 drive-away), Geely EX5 ($40,990 drive-away), XPeng G6 ($54,600 plus on-roads), Leapmotor C10 ($45,888 plus ORCs), BYD Sealion 7 ($54,990 plus ORCs) and Deepal S07 ($53,900 plus ORCs).
However, in its recently updated from, it still outsells all of them and is Australia’s top-selling EV.
It’s thought some of the cost savings could come from employing smaller batteries and using less powerful motors, which will both take their toll on range and performance.
Tesla could also offer more options on a subscription basis.
In China, spy shots of the new Model Y have revealed it has lost the panoramic glass roof and rear entertainment screens. The distinctive continuous light strip across the nose appears to have also been eliminated.
We won’t have to wait long until Tesla reveals all as the cut-price Model Y enters production as soon as this August or September, suggesting it will be available to order soon.
The cheaper Model Y is tipped to be followed shortly after by a more affordable Model 3 sedan.
Tesla execs hope that the success of the affordable Model Y will help it offset heavy losses posted in the second quarter that saw income drop by 16 per cent to $US1.17 billion ($1.78b).
Some of the 13 per cent of that decline was attributed to slowing in sales. A reduction in the average transaction price and increased costs also factored into the profit slump.
If that’s not bad enough for the US brand, the roll-back of a US government emissions mandate that was supposed to see all car-makers make 50 per cent EVs by 2030 and President Donald Trump’s threat to kill the $US7500 ($11,400) government sponsored electric car grant are also bad news.
Then there’s the lucrative electric car credits it receives from other car-makers failing to meet their green car obligations. These revenues have dropped by 51 per cent since Q2 2024 to $US441 million ($670m)
Admitting there’s still trouble ahead, Musk told media that Tesla “probably could have a few rough quarters; I’m not saying we will, but we could”.
Tesla has also been disappointed with the facelifted Model Y’s sales struggle in key markets like China that have been triggered by both increased competition and Trump’s tariffs.
A drop-off in sales in Europe, meanwhile, has been linked with Musk’s political beliefs and previously close ties with Trump.
The number of Teslas sold in the region has dropped dramatically from 165,000 (first half of 2024) to 110,000 in the first six months of 2025.
While some might have hoped for a promise of all-new replacements for the Model X and Model S, plus a timeline to roll out the all-new Model 3 and Model Y, Musk declared Tesla’s future revenue would be linked to the car-maker’s self-driving tech that would help it launch both a robotaxi service and a fleet of driverless vehicles like the Cybercab.
“Once you get to autonomy at scale in the second half of next year, certainly by the end of next year, I think I’d be surprised if Tesla’s economics are not very compelling,” said Musk.
During the call, in typical Musk hyperbolic style, he stated that “half of the population of the US will be covered by Tesla’s Robotaxi by the end of the year”.
Currently, Tesla’s robotaxi is operating in just one geofenced location in Austin Texas and, despite being claimed to be a ‘paid-for ride’, service is currently only limited to select invitees who share the ride with a back-up human driver.
That suggests it some way off from being rolled out nationwide.
