Get Ready: Tesla’s Budget Model Launching in Q4 2025 – Expected Starting Price of $36K!

Tesla’s Affordable Model Update

In July 2025, during their earnings call, Tesla shared exciting news about a new, budget-friendly vehicle. Production for this model is underway, but sales won’t start until late this year.

Tesla aims to ramp up production in the third quarter of 2025. They plan to simplify the new car, likely based on the popular Model Y. Instead of starting from scratch, they are making a more affordable version, which should help them reach customers faster.

Slower Production

Although the launch is much anticipated, Tesla warns that ramping up production may take longer than expected. The company is primarily focused on meeting demand for existing models because of recent changes to the EV tax credit in the U.S. This shift has led Tesla to increase promotions for their current vehicles.

With production lines busy at both the Fremont and Texas factories, there’s not much room for retooling to manufacture the affordable model. However, this model will benefit from existing technology found in the Model 3 and Model Y platforms.

The E41 Model

Much discussion has centered around what’s being called the E41, a modified Model Y aimed at reducing costs by about 20%. It will have fewer features, trading luxuries like heated seats and premium audio for lower prices. This choice allows Tesla to deliver an electric vehicle (EV) to the market quickly, catering to current customer needs instead of waiting for a more groundbreaking design.

Bigger Plans Ahead

Looking toward 2026 and 2027, Tesla has plans for new battery technology and smaller models. As they get this new production plant up and running, it seems they are preparing for even more future offerings. However, with a challenging economic landscape affecting car sales, launching an ultra-low-cost vehicle now may not be the best strategy.

Conclusion

Tesla’s focus on producing a more affordable model aims to address a wider audience. Starting with a simplified version of an existing EV makes sense in today’s market. As Tesla moves ahead, it’ll be interesting to see how they further innovate while keeping an eye on cost and consumer demands. Keep watching—they’re just getting started!

For more information on Tesla’s electric vehicle innovations, check out this report from Business Insider.

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Tesla, Model Y, E41, Next-Gen, Affordable Model, Model 3, Q2 2025, Earnings Call