Tesla's Affordable Model Y Hits Speed Bump as Production Delay Looms

Tesla has reportedly postponed the production of its affordable Model Y variant in the United States. Originally, Tesla had promised the launch of this economical model in the first half of the year to improve its sluggish sales performance.

Insiders reveal that the low-cost Model Y, internally coded as E41, was slated for global mass production starting in the U.S. However, it is now expected to be delayed by several months from Tesla's publicly stated timeline, potentially shifting to the third quarter of this year or early next year.

While the specific reasons for the delay remain unclear, reports indicate that Tesla plans to manufacture 250,000 units of the affordable Model Y in the U.S. by 2026. Future production is also planned for China and Europe.

This strategic move will likely be in the spotlight when Tesla releases its financial statements next week. Investors have been keenly focused on Tesla's line-up of economical models, with the company currently primarily selling the Model 3 and Model Y. Faced with slowing demands for electric vehicles and increasing competition, Tesla aimed to bolster sales and recover market share through the introduction of more affordable electric vehicles.

These delays also coincide with indications that Tesla is considering launching a simplified version of the Model 3. CEO Elon Musk had previously committed to releasing an entire new model priced around $25,000, known to the outer world as the Model 2, but the company opted to prioritize its Robotaxi development, putting the Model 2 project on hold.

Earlier this year, Tesla disclosed that its annual delivery volume had experienced its first-ever decline last year. Analysts anticipate further declines in Tesla's sales, citing factors such as Musk's association with former President Trump and his support for far-right politicians in Europe, which are believed to tarnish Tesla's brand image.

Currently, automakers are broadly grappling with risks of rising prices and supply chain disruptions, especially following a 25% tariff imposed by Trump on imported cars and components. Industry sources claim that Tesla has increased its procurement of components from North America over the past two years, a strategic move to mitigate tariff risks for the E41.