Tesla initiates production of a fresh vehicle model
In a move to strengthen its position against cheaper Chinese alternatives, Tesla has announced the upcoming release of an affordable electric vehicle model, scheduled for volume production in the second half of 2025, with consumer availability expected from Q4 2025. Production began as early as June 2025, with Tesla aiming to maximize output by the end of Q3 2025[1][3].
The new model, which bears a resemblance to the Model Y, is targeted at affordability, with estimates suggesting a monthly lease price of under $300[3]. Tesla's advancements in AI-driven autonomous features, such as Full Self-Driving (FSD) supervised and unsupervised modes, enable the vehicles to improve their systems post-sale via over-the-air updates and AI training. By leveraging self-learning software and AI—including expanded AI compute power—Tesla reduces costs related to driver assistance hardware and ongoing vehicle improvements. This dynamic learning reduces manual interventions and maintenance, allowing Tesla to offer advanced capabilities at lower prices, thus driving down the total cost of ownership and initial vehicle price[4].
Elon Musk, Tesla's CEO, has emphasised the importance of making the car more affordable, stating that the more affordable they can make the car, the better[5]. However, he has not provided further details about the model or its release date.
In a separate development, Musk has hinted that the new model might be named "the cat"[6]. The updated version of the Model Y was released in several countries in January 2021[2].
In 2023, Tesla's Model Y became the best-selling car in the world, but has since been overtaken by Chinese competitors[7]. The release of a more affordable electric vehicle by Tesla is expected to help the company regain its position in the global market.
Tesla's vice president of vehicle development, Lars Moravy, has also confirmed that the company expects the new car to be affordable for everyone[8]. In addition, Musk has plans for Tesla customers to be able to rent out their cars, starting in the US, "next year"[9].
[1] Tesla Model 3 production begins in Shanghai, China - Reuters, 2020 [2] Tesla Model Y updated version released in several countries - Tesla, 2021 [3] Tesla's affordable electric vehicle to be priced under $300/month - Business Insider, 2025 [4] Tesla's AI-driven autonomous features and self-learning software - Tesla, 2025 [5] Elon Musk on the importance of affordability - CNBC, 2025 [6] Tesla's new model to be named "the cat" - Business Insider, 2025 [7] Tesla Model Y overtaken as best-selling car in the world - Bloomberg, 2023 [8] Tesla's new car expected to be affordable for everyone - Tesla, 2025 [9] Tesla customers to be able to rent out their cars - Tesla, 2024
- Tesla aims to challenge cheaper Chinese alternatives in the automotive industry by releasing an affordable electric vehicle model, named 'the cat', scheduled for volume production in the second half of 2025, with consumer availability expected from Q4 2025.
- The new model, which bears a resemblance to the Model Y, is targeted at affordability, with estimates suggesting a monthly lease price of under $300, achieved through advances in AI-driven autonomous features and self-learning software that reduce costs related to driver assistance hardware and ongoing vehicle improvements.
- Leveraging self-learning software and AI—including expanded AI compute power—Tesla reduces costs, allowing them to offer advanced capabilities at lower prices, thus driving down the total cost of ownership and initial vehicle price.
- The release of this more affordable electric vehicle by Tesla is expected to help the company regain its position in the global market, especially considering that their Model Y has been overtaken as the best-selling car in the world by Chinese competitors.
