Tesla, Inc. TSLA has delayed the launch of its long-anticipated affordable vehicle, which is a stripped-down version of its popular Model Y SUV, in the United States. The company previously pledged to release lower-cost cars in the first half of the year, aiming to rejuvenate lagging sales. Per sources, U.S. production of the cheaper Model Y, codenamed E41, will start later than originally planned, likely between the third quarter and early next year. The cause of the delay is unclear.

Per sources, Tesla targets manufacturing 250,000 units of the more affordable Model Y in the United States by 2026. Production in China and Europe is also in the pipeline. These updated production plans and delays in the United States have not been publicly disclosed before.

TSLA’s upcoming lineup of budget vehicles has generated significant interest among fans and investors, who hope that these vehicles will help reverse the company’s declining sales and shrinking market share. The automaker has also updated the current Model Y with design tweaks. The U.S. Long Range All-Wheel Drive version starts at around $49,000 before federal tax credits.

Per Reuters, the E41 will debut in China in 2026 and is expected to be about 20% cheaper to produce than the refreshed Model Y. There’s no confirmed timeline yet for a European release. Tesla is also working on a bare-bones version of its Model 3 compact sedan, per sources.

The company hasn’t commented on the reported production delays or targets. Automakers like Tesla are facing challenges, including rising costs and supply chain disruptions, especially following a 25% tariff on imported vehicles and parts implemented by Trump. To mitigate the impact of tariffs, Tesla has increased its use of North American parts in recent years. The company recently paused plans to ship parts for its Cybercab and Semi truck from China due to these tariffs.

Tesla Scales Back Cybertruck Production Amid Weaker Sales

Per Business Insider, Tesla is scaling back Cybertruck production goals. Cybertruck sales have slumped amid multiple recalls and investor concerns. Tesla has also reduced staffing on certain Cybertruck production lines. As of January, several workers from the Cybertruck section at the Texas Gigafactory were reportedly reassigned to work on the Model Y line. This restructuring reportedly began in December, after employees were surveyed about preferred job assignments.

Cybertruck sales dropped to 6,406 units in the first quarter of 2025, down from 12,991 reported in the fourth quarter of 2024. Since its late 2023 launch, Tesla has sold just over 46,000 Cybertrucks. The company also saw a 13% decline in overall vehicle sales in the first quarter of 2025.

In March, TSLA halted Cybertruck deliveries due to concerns about side paneling detachment. Shortly after, it recalled all Cybertrucks, one of eight recalls since 15 months of production. 

To spur Cybertruck sales, Tesla now offers free lifetime charging for buyers of the $95,000 Foundation Series model, though the perk applies only to the original owner, not commercial drivers.

To boost sales, Tesla introduced incentives and released a more affordable Cybertruck, costing about $70,000. This version reduces the price by $10,000 but comes with rear-wheel drive and omits features like air suspension and vegan leather seats.

Other Automaker Working on Affordable EVs

Rivian Automotive, Inc. RIVN plans to expand its lineup with the R2, R3, and R3X, targeting budget-conscious buyers. R2, a midsize SUV, will be launched in early 2026 at a much lower price than the R1 models. The company expects R2 as a key growth driver, highlighting major cost savings in materials and production.

Ford Motor Company F is set to reintroduce the base model Bronco for the 2025 lineup and has hinted at a new advertising campaign featuring the Maverick and Bronco Sport, two of its most affordable vehicles. The company is also committed to boosting production of the F-150's budget-friendly STX version, along with entry-level trims of the Escape and Explorer, to provide dealerships with a wider range of cost-effective options.

Tesla Stock Performance and Estimates

Tesla shares have lost 40.2% year to date, underperforming the Zacks Auto, Tires and Trucks sector and the Zacks Automotive - Domestic industry’s decline of 28.5% and 37.1%, respectively. 
 

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Tesla has a Value score of F. The Zacks Consensus Estimate for its earnings has moved down over the past seven days.
 

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TSLA stock currently carries a Zacks Rank #4 (Sell). 

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