Tesla said it has begun production of its long-anticipated affordable electric vehicle, marking a significant step toward expanding its product lineup and appealing to a broader market segment. The company confirmed the development during its second-quarter 2025 financial update, stating that the first units were completed in June, with volume production scheduled to begin later this year.
“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 in a shareholder update.
Tesla did not disclose the model name, technical specifications, or pricing details of the new EV. However, the vehicle is expected to be a cost-reduced version of the Model 3 and Model Y, utilizing a simplified design and materials to lower manufacturing costs. Analysts expect the vehicle to start around US$35,000, making it Tesla’s most affordable offering since the original Model 3.
The production strategy involves leveraging existing Model 3 and Model Y platforms, allowing Tesla to optimize production costs by using current assembly lines. This approach contrasts with previously scrapped plans to develop an entirely new sub-US$25,000 model, which CEO Elon Musk confirmed was shelved in early 2024 in favor of other priorities, including Tesla’s robotaxi project, the Cybercab.
While no timeline for order availability has been announced, Tesla’s history with entry-level EVs suggests strong demand upon launch. The new model could play a pivotal role in Tesla’s strategy to maintain EV market share amid growing competition and slowing global demand.
The vehicle is expected to launch formally in the coming months, with production capacity ramping up in the second half of the year.