Tesla resurrecting $25,000 Model 2 project as smaller and cheaper Model Y Standard alternative

Tesla is planning to release cheaper Model Y and Model 3 versions in its most competitive market, similar to the Standard trims that it announced in the US.

It won't simply release a Model Y Standard in China, though, but will rather adapt the hardware features and design comfort it plans to remove from it to the local market tastes.

In the US, Tesla nixed more than 20 features and options to get to the sub-$40,000 price point of the Model Y Standard, from the light bars, to the battery pack capacity. Given the abundance of cheaper, better electric cars from Tesla's main competitor BYD and many others in China, a stripped-down Model Y may look rather different from what the Standard trim offers in the US.

This might explain why Tesla is only planning to release base Model Y and Model 3 trims there next year, when it is expected to install AI5 FSD hardware to set them apart from the competition.

Tesla Model 2 release date

Besides the E41 and D50 trims that are the Model Y and Model 3 Standard versions for China, Tesla is resurrecting the NV91 and NV93 projects, too, tip insiders. These are variants of the cheapest $25,000 Tesla vehicle, tentatively dubbed the Model 2, which were developed in the US under the Project Redwood moniker.

The NV91 (for "new vehicle"), in particular, was in a very advanced phase of development as an affordable car, styled after the Model Y crossover, but with a much smaller battery and more compact dimensions. It was this elusive $25,000 car that Tesla chose to put on the back burner and focus on bringing the Cybercab and Robotaxi platform to fruition instead, as well as on making the Model Y and Model 3 more affordable by taking out features and comforts.

At the time, however, Tesla's chief designer Franz von Holzhausen said that the rumors that Tesla has abandoned its $25,000 Model 2 are greatly exaggerated and advised to "stay tuned." The cheapest Tesla Model 2 is expected to be "smaller, to be clear," as per Elon Musk, with a 54 kWh battery that will ensure about 250 miles of range, and next-gen AI5 FSD hardware.

This likely means that the Model 2 may be released in Q4 2026, the earliest that Tesla is expected to start installing HW5 computer and cameras in its vehicles en masse. This jibes with previous rumors that Tesla will only be releasing the proverbial $25,000 Model 2 in 2026, after it has launched facelifts of all its other models in 2025, and introduced Standard base trims to preserve its margins before the big experiment with its first mass market electric vehicle that it was planning to produce four million units of.

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