Tesla electric vehicle with a reduced size and lower price tag undergoes testing prior to its upcoming release
Tesla to Launch More Affordable Electric SUV in Q4 2025
Tesla is set to launch a more affordable electric SUV, believed to be a simplified version of the Model Y, in the fourth quarter of 2025. The company has begun trial production since June 2025 at its Fremont factory, with volume production planned for the second half of the year.
The prototype of this smaller electric SUV, covered at the front and rear, has been spotted at Tesla's Fremont factory. Videos of the prototype have been captured and shared online, showing it driving around a track and reversing, indicating that it is being thoroughly tested before its launch.
The new affordable Tesla models will feature cost-cutting measures such as new simpler bumpers, simpler lighting, smaller wheels, and fewer exterior color options. Several premium features currently available on the standard Model Y are expected to be removed or downgraded in this version. These features likely to be omitted include the glass roof, rear touchscreen, ventilated and power-folding seats, premium audio system, and some advanced Autopilot functionalities. This stripped-down version aims to lower the price while still resembling the current Model Y in form and shape.
Tesla plans to follow the affordable Model Y with a similarly pared-down Model 3 version, featuring fewer features and possibly a smaller touchscreen with limited software functionality.
The momentum for Tesla is expected to continue, built off the back of the launch of the new Model Y which began deliveries in May locally. The more affordable Model Y is expected to receive tens of thousands of orders by the end of the year, potentially bringing the next phase of growth for Tesla.
Riz Akhtar, a mechanical engineer with a passion for cars, particularly EVs, and a goal to reduce transport emissions in Australia, shares this excitement. Riz Akhtar, the founder of carloop based in Melbourne, specializes in Australian EV data, insight reports, and trends. He currently drives a red Tesla Model 3.
The car appears to be shorter in length than the standard Tesla Model Y, measuring between 4.4 and 4.6 meters. With the price of Tesla's Model Y starting at $58,900, and many more affordable options on the market on the way, this production strategy could boost the productivity of Tesla's already high-output production lines.
This approach reflects Tesla’s ongoing strategy to offer more affordable electric vehicles by reducing features and production costs, addressing customers with strong desire but limited budgets.
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