Cheapest Model Y and Model 3 with watered down specs set for belated US launch

After the launch of the cheaper, more compact Model Y Juniper refresh in China was allegedly postponed to 2026, the same may be happening with the US version of Tesla's affordable bestseller.

Declining to say if the delay is due to supply chain issues stemming from the White House administration's tariff spat, insiders claim that Tesla will release the smaller, more affordable version of the Model Y in the US later than originally envisioned. Apparently, Tesla now plans to make 250,000 of those in 2026.

At the last quarterly earnings conference call, Elon Musk mentioned that an affordable Tesla model is still on track for a US release in the first half of the year. While it is not clear if Tesla meant the cheaper Model Y, or something in the Model 2 vein, which has again been rumored to resemble a shrunken Y, the new launch timeframe has allegedly moved to the holiday quarter, or early next year, concurrent with the Chinese launch.

The cheaper Model Y with the internal codename E41 will reportedly be a significantly watered down version of the Juniper refresh. Tesla might do what it just did with the Cybertruck, releasing a base RWD model with cloth seats, no air suspension or light bar, and an interior devoid of many other bells and whistles.

Previously, it did the same with the Model 3 in Mexico, but those cars were still the same size as the original Cybertruck or Model 3. For the cheaper car, previously dubbed Model 2, Elon Musk is on record saying that it will be "smaller, to be certain."

That could now very well be applied to the idea of a shrunken, stripped down Model Y that Tesla will sell for much less than the Juniper refresh AWD edition that currently goes for over $50,000. The production costs of the cheapest Model Y E41 are said to be 20% lower, so the car could be priced from $40,000 before the federal tax credit, making it an instant hit.

The production plans for the cheap Model Y, which will probably be a single-motor RWD configuration, are now in flux, and the launch is more likely to happen in the holiday quarter or early next year. This is when Tesla is said to introduce a stripped down Model 3, too, which is likely to become its cheapest vehicle.

Tesla is reporting earnings next week, and might have more to say about the smaller, cheaper Model Y delay rumors.

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