New low-cost Tesla Model Y coming
The new base variant will be a pared-down version of the existing Model Y rather than an entirely new model. Production is expected to begin around August or September this year.
The move follows a promise made by Tesla CEO Elon Musk in January to introduce lower-cost models. The decision also comes as the U.S. prepares to phase out a $7,500 federal tax credit for electric vehicles, part of President Donald Trump's broader rollback of emissions mandates—adding urgency to Tesla's efforts to attract price-sensitive buyers.
The carmaker's second-quarter earnings revealed a 16 percent fall in net income, down to $1.17 billion, driven by a 13 percent drop in vehicle deliveries, falling average selling prices, and rising operational costs.
Notably, revenue from regulatory credits—an important source of income for Tesla—fell sharply by 51% year-on-year. The company reported a $154 million drop in these credits compared to the previous quarter alone.
Tesla's performance in 2025 has been hampered by sluggish sales in China, one of its key markets. Growing competition from local electric vehicle manufacturers and ongoing tariff disputes have further complicated its position, despite the launch of an updated Model Y in the region.
With no major new mainstream models on the immediate horizon, Musk is instead betting on the company's autonomous driving technologies. He expects future growth to come from services like the forthcoming robotaxi network and vehicles such as the Cybercab.
Tesla has also made substantial investments in developing humanoid robots, which Musk sees as a long-term growth avenue.
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