“Affordable” car not the Tesla ‘Model 2’; here is what’s planned instead

Tesla’s long-anticipated affordable model is not a compact “Tesla Model 2,” as many expected. Instead, it’s a stripped-down version of the current midsize crossover.

During Tesla’s Q2 2025 earnings call, Elon Musk clarified that the cheaper Tesla “is just a Model Y.” He said it with humor, but it essentially confirms that a new design or a fresh platform isn’t in the works:

Fundamentally, the biggest obstacle remains that so many people..the desire to buy the car (Model Y) is very high, just people don’t have enough money in the bank account to buy it. Literally that’s the issue. Not a lack of desire, but a lack of ability. So the more affordable we can make the car, the better

Elon Musk, CEO of Tesla, on 23 July, 2025, during the Q2 2025 Earnings Call

Musk interrupted the company’s chief financial officer Vaibhav Taneja, who was answering a question about the affordable car’s design. The confirmation matched remarks of Tesla’s top officials from the Q1 2025 call in April.

Basic design

The affordable car will be a basic Model Y. Expect simpler bumpers, smaller wheels, basic lighting, and fewer paint options. Features like the light bands, glass roof, rear display, ventilated seats, and upgraded sound system are likely to be dropped.

During the Q1 2025 call, Lars Moravy, Tesla’s VP of Vehicle Engineering, stated the new models “will resemble, in form and shape, the cars we currently make.” He stressed price, not appearance, as the main change. During the call, Taneja noted that the affordable models will use existing production lines, limiting design changes but enabling fast scale-up without extra investment.

Simplified features

What’s coming in place of the Tesla Model 2 should omit luxury equipment. Buyers can expect the same touchscreen as the current Model Y, but fewer comfort features, and no autonomous driving options. Components like powered rear seats, ventilated front seats, the glass roof, and premium audio may not be available in the interest of lower cost.

Production begins; Oct-Dec 2025 release

Tesla’s Q2 2025 investor presentation confirmed that trial production started in June. Musk said these models would be “available for everyone” during the last quarter of 2025. A cut-price Model 3, following the same cost-cutting operations, should follow shortly after.

Tesla may also remove sound insulation to cut weight and cost. Musk hasn’t shared specifics, but reductions in powertrain performance would allow smaller brakes and tyres, further reducing the bill of materials.

Tesla continues to stretch its current platform for new applications. While the facelifted ‘Juniper’ range will take in 7-seat and Performance versions later this year, a long-wheelbase Model Y, heading to China towards the year end, is another variant that avoids costly retooling. For now, there’s no budget hatch or crossover in the pipeline.

Shrawan Raja, founder & editor of ElectricVehicleWeb.com

During the Q2 2025 call, Musk said that the idea of introducing the future variants was to solve the affordability problem with lower monthly payments and a lower entry price for many customers who have the desire to drive a Tesla. He confirmed that sales of the low-priced versions will begin in Q4 2025. That said, the launch isn’t just about price reduction. Lars Moravy said in April that Tesla intends to improve current capacity utilization. These variants allow Tesla to increase output without having to retool its facilities.