According to the report, Tesla is planning to create a low-cost version of its bestseller Model Y to drive a decline in sales in China.
The car costs at least 20% less production than the version released last year, and will be manufactured on existing production lines, sources with knowledge of the matter told Reuters.
According to the report, mass production of low-cost vehicles (codenamed “E41”) will begin in 2026 at Tesla's largest factory with output.
Elon Musk electric car companies are facing a sluggish sales in China as demand slows down and local competition has increased from rivals like BYD backed by Warren Buffett.
According to the report, the new low-cost Model Y will be sold primarily in China, but will also be produced in Europe and North America.
Musk in January said the company will introduce a low-cost model in the first half of 2025.
The Tesla Model Y, a fully electric medium-sized SUV crossover, now starts at $36,351 in China.
This was China's best-selling car in 2023 and 2024, but faces lower-cost competition with Chinese rivals, and analysts warn that Xiaomi's Yu7 crossover (to be released this year) could further threaten Tesla's sales.
The latest Xiaomi model is expected to cost around $34,500. According to Carnewschinaan English news site about China's automobile industry.
Xiaomi is the third largest smartphone manufacturer in the world.
The Chinese tech giant began selling cars in April, but the SU7 sedan has surpassed the Tesla Model 3 every month since December.
Tesla's market share in the Chinese electric vehicle market fell from 11.7% last year to 10.4% last year.
Meanwhile, Tesla is on the volatile ground at home due to his relationship with President Trump, who has been involved in Musk, as his face on the cost reduction committee hits a company stock.
Tesla shares rose last year, backing a second term of running after Musk launched a campaign with Trump.
But just as Trump's threatened tariffs spun investors, stocks are currently surged alongside other “epic seven” tech stocks.
And Musk's close ties with the president have also led to the collapse of protests at Tesla showrooms around the country.
Several Tesla cars are on fire, and Colorado dealers are being destroyed by the term “Nazi cars” surrounding the history of mask anti-Semitic social media posts.
Trump recently agreed to buy a red Tesla model at “full price” when hosting a showcase of masked vehicles in a driveway in the White House and denounced the protest.
Tesla has not recently announced any new products, except for the self-driving “Cybercab,” which is planned for 2026.
Musk dodges the competition by focusing on launching different versions of existing models.
The company plans to launch a six-seat variant of the Model Y in China later this year, according to the report.
With post wire
