UPDATE: Tesla CEO Elon Musk has just revealed that the company’s highly anticipated budget-friendly electric vehicle (EV) is essentially a Model Y. During Tesla’s second-quarter earnings call on Wednesday, Musk stated, “It’s just a Model Y. Let the cat out of the bag there,” confirming what investors have been eager to hear.
Musk’s announcement comes as the EV giant faces increasing competition from low-cost Chinese rivals. The need for a more affordable EV has become urgent, as Tesla aims to maintain its competitive edge in the global market. Analysts emphasize that releasing a budget model could significantly enhance Tesla’s position against emerging competitors, particularly in China, where sales have dipped.
In the second quarter of 2025, Tesla sold 129,000 vehicles in China, marking a nearly 12% decline from the same period last year, according to the China Passenger Car Association. This drop coincides with the rise of competitors like Xiaomi, which recently received over 200,000 orders within three minutes for its new YU7 electric SUV, priced around $35,000, slightly undercutting the Model Y’s starting price of $36,760.
Musk highlighted that the biggest barrier for potential EV owners is not desire but affordability. “Literally, that is the issue. Not a lack of desire, but a lack of ability,” he stated during the call. He emphasized that making Tesla vehicles more affordable is crucial for expanding ownership among consumers.
While Musk did not provide specifics about the new EV’s release date, he assured investors that the self-driving capabilities of Tesla vehicles will enhance their value. “It will be a very big deal when people can release their car to the fleet and have it earn money for them,” he explained. Musk expressed confidence that customers in the U.S. will be able to rent out their cars as early as next year, significantly increasing the vehicle’s affordability.
Musk previously mentioned that he expects Tesla’s vehicles to operate with unsupervised full self-driving features in various U.S. cities by the end of 2025, and “probably everywhere” in North America the following year. This technological advancement could dramatically enhance the financial viability of owning a Tesla, akin to how homeowners can rent properties on platforms like Airbnb.
The Model Y, which was first launched in 2020, has been a significant player in the EV market. However, as Tesla faces challenges from new entrants, the urgency for a budget model has never been higher. As Tesla prepares to adapt to market demands, the question remains: how quickly can it roll out this new model to regain its dominance?
Stay tuned for more updates on Tesla’s budget-friendly EV and its implications for the automotive industry.
