Tesla says it’s still on track to put “more affordable models” into production by mid-2025, though the electric specialist’s executives stopped short of indicating what form these will take.

In its first quarterly financial update for 2025, Tesla confirmed production, deliveries and operating income have slipped, down 16 per cent, 13 per cent and 66 per cent respectively compared to the same period in 2024; though the company remains hopeful its fortunes will turn with the introduction of new vehicles built on existing assembly lines.

“Plans for new vehicles, including more affordable models, remain on track for start of production in the first half of 2025,” Tesla said in its slide deck.

“These vehicles will utilise aspects of the next generation platform as well as aspects of our current platforms and will be produced on the same manufacturing lines as our current vehicle lineup

“This approach will result in achieving less cost reduction than previously expected but enables us to prudently grow our vehicle volumes in a more capex efficient manner during uncertain times.

“This should help us fully utilise our current expected maximum capacity of close to 3 million vehicles, enabling more than 60 per cent growth over 2024 production before investing in new manufacturing lines.

“Switchover of production lines for the new Model Y resulted in several weeks of lost production. During the switchover, we also prepared our factories for the launch of new models later this year. Given economic uncertainty resulting from changing trade policy, more affordable options are as critical as ever.”

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Further to the above, Tesla’s chief financial officer – Dev Ateneja – said despite the company’s near-term challenges of “tariffs and bad image”, it still plans to “focus on bringing cheaper models to market soon”.

“The start of production is still planned for June. Additionally, the advancement in [Full Self Driving]-related features, including pilot [Cybercab] launch in Austin later this year, should help create a new era of demand. I would like to thank everyone at Tesla and our customers,” Mr Ateneja said, as transcribed by Investing.com.

Mr Ateneja then very vaguely answered an unnamed journalist’s question about the specifics around these new “cheaper” models – i.e. whether they will be just more affordable Model Y variants or a whole new model entirely – despite the fact they’re planned for production within a couple of months.

“The real thing which we are trying to focus on is affordability. And using our existing lines, there’s always limitations when you’re using existing lines as to how many different form factors can you bring. So that’s the way I would say you should think about it,” Mr Ateneja responded.

Lars Moravy, vice president for vehicle engineering at Tesla, followed up with: “Models that come out in next months will be built on our lines and will resemble, inform, and shape the cars we currently make.

“With the recent upgrades on the Model 3 and Model Y platforms, we need some pretty great cars at pretty great prices, and we added a bunch of features and things like that.

“I think it’s easy to consider that, you know, moving forward, Tesla doesn’t make bad cars, and… our intent is not to make a car that is any worse than any car we’ve ever produced in the past.”

Rumblings of Tesla’s new entry-level electric vehicle (EV) hav been swirling for some time. Originally tipped to be a sub-US$25,000 (A$39,121) built in Mexico, the story has shifted on a number of occasions.

In December 2023 Tesla’s outspoken CEO, Elon Musk, indicated production of Tesla’s new entry model will commence production at the Texas Gigafactory due to delays with the company’s Mexican plant, though still promised it will eventually be built south of the border also, once the Mexico factory comes online.

Reports that Mr Musk has also confirmed the new vehicle will be produced at the Gigafactory Berlin-Brandenburg as well as a potential new facility in India, have also been published over the years-long drip feed.

These are somewhat consistent with Mr Ateneja’s and Mr Moravy’s comments that the new, more affordable Tesla model(s) will be built on existing production lines, though other than some teaser sketches (above), not much else is known about this new car.

Further, Tesla is no stranger to impromptu, last-minute reveals. In January the facelifted Model Y was quietly revealed on the brand’s Australian website on the same day it opened order books, ahead of deliveries commencing in April-May.

It means that despite little official detail about this new vehicle other than discussing its existence in the company’s plans, we could see a spontaneous reveal online in June with pricing and specifications detailed the same time as online orders open.

Noting the use of the plural term “models” in Tesla’s official communications, we could be expecting more than one new vehicle with a lower price tag – a cheaper Model Y was reported to be in the works back in March.

Reuters reported word from sources that this more affordable Model Y – codenamed E41 – will be built on existing production lines at Tesla’s Shanghai plant. However, that report stated that mass production will begin in 2026.

E41 will reportedly be at least 20 per cent more affordable to produce than the refreshed Model Y revealed recently, though interestingly the sources also said the car will be smaller.

According to Reuters, these Chinese-built vehicles will be “mainly sold in China” to help Tesla defend its market share there, though sources told the outlet that this more affordable version will also be produced in Europe and North America, without specifying a timeframe.

That could mean the alleged Model Y ‘entry’ won’t be exclusive to China, and therefore it could come to Australia. All Tesla vehicles sold in Australia are sourced from China.

Tesla already sells a stripped-out base Model 3 RWD in Mexico, which forgoes niceties like multi-colour ambient lighting and a rear passenger screen, while leatherette upholstery has been replaced with grey cloth – a first for the Model 3 – and the front seats do without heating and ventilation.

By also removing the heated steering wheel, revising the sound system to a nine-speaker unit instead of the usual 17, as well as removing acoustic glass for the rear windows, Tesla has cut 50,000 pesos (~A$4004) from the base price. Currently, the Chinese-made Model 3 in Australia starts from $54,900 plus on-road costs.

Similar measures could see the entry pricing for the Model 3 and Model Y cut by a few grand Down Under, potentially bringing the Model 3 under the $50,000 barrier to better compete with the likes of the BYD Seal, and the Model Y closer to the BYD Sealion 7’s starting price of $54,990 plus on-roads.

In recent months Tesla’s slowing sales globally have been reflected in Australia, with successive months of decline contributing to one of the brand’s slowest quarters ever in our market.

To the end of March there have been 5160 new Teslas registered in Australia, down a whopping 59.65 per cent on the same quarter the year prior. This is in part attributable to the rollout of an updated Model Y, though the brand’s mid-size SUV remains Australia’s favourite electric vehicle.

With more new competitors from China and legacy manufacturers on the way, the coming months will be very interesting to watch.

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