Tesla to delay US launch of cheaper Model Y in major setback for Elon Musk: report

Tesla is gearing up to launch an affordable version of its popular Model Y electric SUV, but the production timeline has been pushed back, according to sources familiar with the matter.

The company had promised to introduce budget-friendly vehicles in the first half of the year to potentially boost sales. The lower-cost Model Y, codenamed E41, is set to be produced in the US, with production expected to start later than originally planned. The delay in production and revised launch targets have not been officially announced by Tesla.

It is unclear why the production has been delayed, but sources suggest that Tesla aims to manufacture 250,000 affordable Model Ys in the US by 2026. The company also plans to eventually produce the new vehicle in China and Europe. The delay in US production and the revised production target have not been previously disclosed.

Analysts anticipate a decline in Tesla sales this year due to various factors, including concerns over CEO Elon Musk’s association with President Trump and far-right European politicians. The company’s aging vehicle lineup and lack of a budget-friendly model are also seen as challenges.

Despite initial plans for a cheaper EV platform with vehicles priced at $25,000, Musk shifted focus to robotaxi development. Automakers are also facing challenges such as rising prices and supply-chain disruptions due to tariffs imposed by Trump on imported vehicles and auto parts.

Tesla has been working to increase North American sourcing for parts to reduce tariff exposure for the E41. The company recently halted plans to ship components from China to the US for the Cybercab and Semi truck due to tariffs.