Tesla has announced a delay in the rollout of its lower-cost version of the Model Y in the United States. Initially slated for an earlier release, the company revealed in June that it had completed the first builds of this budget-friendly vehicle. However, the official sales launch is now set for the fourth quarter of this year, with production ramping up at a slower pace than originally planned.
The stripped-down version of the Model Y is designed to be approximately 20% cheaper to produce compared to the refreshed Model Y. Industry sources indicate that this new model could potentially scale production to about 250,000 units annually in the U.S. by 2026, according to reports from Reuters earlier this year.
This announcement comes on the heels of Tesla achieving record quarterly deliveries for the period ending in September. The surge in electric vehicle (EV) purchases was significantly influenced by the upcoming expiration of the $7,500 U.S. EV tax credit on September 30. However, analysts are expressing concerns that sales may decline in the coming months due to the lack of this incentive.
Looking ahead, Wall Street analysts anticipate that Tesla's overall deliveries will soar to 1.85 million vehicles next year. The newly introduced lower-cost Model Y is expected to contribute approximately 155,610 units to this total by 2026, as per estimates from Visible Alpha.
Despite these optimistic projections, Tesla is grappling with challenges posed by an aging model lineup. The company has not launched a new mass-market vehicle in recent years, relying primarily on incremental updates to the existing Model 3 and Model Y to sustain sales momentum. Moreover, the sales performance of Tesla's latest major launch, the Cybertruck, has been disappointing, leading the company to offer significant discounts on vehicles in inventory over the past few months.
A recent U.S. recall filing from March revealed that 46,096 Cybertrucks were built between its introduction in November 2023 and early this year. This figure highlights the challenges Tesla faces as it seeks to maintain production efficiency and consumer interest in its innovative lineup.
Reporting for this article was conducted by Mrinmay Dey and Akash Sriram in Bengaluru, with editing contributions from Jamie Freed and Mrigank Dhaniwala.
