Tesla CEO Elon Musk dropped a line that all but confirms the much-rumored cheap Tesla is set to reach customers by the end of the year. He also confirmed, however, that the upcoming entry-level EV is just a less well-equipped Model Y. 

Elon Musk confirmed the upcoming cheap Tesla is coming– but ‘it’s just a Model Y’

CEO Elon Musk recently confirmed that the cheap Tesla is on the way, with sales set to start by the end of the year. But the call also confirmed suspicions that the new EV won’t be a stark departure from the current lineup. Or any departure at all, really.

“It’s just a Model Y,” Musk told investors during a Q2 earnings call. So, rather than creating a “Model 2” to undercut the $42,490 starting price point of the Model 3 sedan, Tesla’s new cheap EV will be a bare-bones version of the brand’s best-seller, the Model Y SUV.

Tesla says production for the budget-minded Model Y began last month, with production set to ramp up in Q3 and Q4 before going on sale by the year’s end. However, details on price, equipment, or range aren’t available as of this writing.  

Currently, the 2025 Tesla Model Y starts at around $44,990 before fees and the soon-to-expire $7,500 federal tax credit. However, we expect the stripped and savings-focused cheaper Model Y to start at closer to $35,000.

So how will Tesla get anywhere close to that mid-$30,000 price point? By reducing the upcoming cheap Tesla to the essentials. The entry-level Model Y will likely ride on the same platform, though it may feature a smaller battery pack and fewer quality interior materials.

The new entry-level Model Y may save the brand upwards of 20% in production costs. However, cost-cutting won’t be as simple as throwing in some cloth seats.

The Model Y’s interior is already a rather spartan affair, so finding savings in the cabin won’t be easy. But Tesla might find savings by equipping the cheap new SUV with a less potent EV motor and fewer standard features.