Business Desk 
Mar 14, 2025
Tesla is gearing up to debut a lower-priced version of its best-selling Model Y SUV in 2026 as it seeks to win back market share in China against growing competition.
The new vehicle, internally known as "E41," will be made at Tesla's Shanghai factory and is likely to be at least 20% less expensive to produce than the existing Model Y.
China is the second-largest market for Tesla but has been threatened by local automakers such as Xiaomi, whose YU7 crossover will be a powerful rival. In 2023 and 2024, the Model Y was China's top-selling vehicle, but the firm has been losing its share.
Tesla's share of China's battery-only EV market declined to 10.4% in 2024 from 11.7% in 2023. To counter this, Tesla is going to churn out the cost-effective Model Y with current production lines at its Shanghai factory to ensure quicker rollout.
While most of the production will be for China, Tesla also aims to produce this version in Europe and North America, though timelines remain vague.
Moreover, CEO Elon Musk earlier indicated new budget-friendly models coming in early 2025, but details were not provided. With no new car launches announced in recent times, Tesla is relying on variations of current models to keep its competitive advantage.
Besides the budget-friendly Model Y, the company also intends to launch a six-seat version of the SUV in China later this year.
