Tesla Develops Low-Cost Model Y To Regain Market Share In China - Reports

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(RTTNews) - Tesla (TSLA) is reportedly working on a more affordable version of its best-selling Model Y at its Shanghai factory to reclaim its market position in China.

Citing sources familiar with the matter, The Wall Street Journal reported that Tesla's Shanghai teams are evaluating ways to reduce costs by stripping or simplifying certain features while keeping production on existing manufacturing lines.

Under the project codenamed 'E41', Tesla engineers intend to cut production costs by 20 percent to 30 percent compared to the current Model Y, which starts at approximately $36,400, equivalent to 263,500 yuan, in China.

The budget-friendly Model Y will debut in China first, with potential future availability in the U.S. and Europe. It will be sold alongside the recently refreshed Model Y, the report added.

The EV maker's move comes as it faces intensifying competition from Chinese automakers, whose electric vehicles often come at lower prices and offer advanced driver-assistance features.

To stay competitive, Tesla plans to begin test production of the lower-cost Model Y as early as the third quarter of this year, with mass production targeted for early 2026. However, sources indicate that Tesla could accelerate the timeline if the refreshed Model Y fails to boost sales.

In the pre-market hours, Tesla's stock is trading at $246.78, up 2.53 percent on the Nasdaq.