In a strategic move to revive dwindling global sales, Tesla is preparing to roll out a more affordable version of its best-selling SUV—the Model Y. The announcement comes in the wake of one of Tesla’s worst-ever quarterly performances, and this new variant is expected to serve as a major push to regain market momentum, especially in the U.S. and European regions.

Not an All-New Model, But a Cheaper Model Y

Contrary to earlier expectations of a completely new vehicle—often dubbed the “Model 2” by speculators—Tesla CEO Elon Musk confirmed that the upcoming budget-friendly Tesla is actually a toned-down version of the existing Model Y. While the core design and structure will remain unchanged, the affordable version is expected to lose some premium features to cut costs and appeal to a broader customer base.

Series production for this stripped-down Model Y is projected to begin around August or September 2025. However, Tesla hasn’t yet disclosed whether this affordability-focused strategy will extend to other models like the Model 3 in the future.

Global Strategy: First Stop—U.S. and Europe

The first markets to get the affordable Model Y are likely to be the United States and Europe, both of which have shown signs of declining Tesla sales in recent quarters. In the U.S., the availability of a cheaper variant comes at a crucial time. The federal EV tax credit of $7,500 per vehicle, which previously helped Tesla keep its prices competitive, is set to be rolled back due to changing policies under President Trump’s administration.

The price of the current Model Y in the U.S. starts at USD 51,990, excluding incentives. The new budget-friendly version is expected to come in well below this price point, helping Tesla stay competitive amidst increasing rivalry from Chinese electric vehicle manufacturers and other global automakers.

Tesla Model Y in India: Premium Pricing for a Niche Market

Tesla officially entered the Indian market earlier this month with the Model Y, marking a significant milestone. However, due to the vehicle being imported as a Completely Built Unit (CBU), it attracts heavy import duties and EV taxation. As a result, the Model Y is priced between ₹59.89 lakh and ₹67.89 lakh (ex-showroom) for the RWD and Long Range RWD variants respectively.

Initially available in select cities, bookings for the Model Y are now open across India. Still, with its high price tag, the Model Y remains a niche product in the Indian market—competing in a segment already populated with more feature-rich and better-priced alternatives.

Will India Get the Affordable Model Y?

As of now, there’s no official word from Tesla on whether the affordable Model Y will make it to India. Given the already steep pricing due to import duties, the stripped-down version may not offer a significant enough price drop to justify its presence here. However, there could be potential in another variant—the six-seater long-wheelbase Model Y that was recently showcased in China. If Tesla were to develop a right-hand-drive version of the LWB Model Y for international markets, it might be a more suitable fit for Indian buyers seeking luxury and space.