Why a low-cost Tesla Model Y would be a serious mistake?
This page is translated from the original post "Pourquoi une Tesla Model Y low cost serait une gravissime erreur ?" in French.
- 26/07/2025 12:12
By stating that we have the long-awaited affordable Tesla “before our eyes” referring to the Model Y, Elon Musk raises concerns.
As Tesla faces increasingly fierce competition in the electric vehicle market, especially in China, the idea of offering a low-cost Tesla Model Y is a deadly temptation.
This electric SUV is already the best-selling model in the world, across all types of powertrains. Therefore, according to Elon Musk, CEO of Tesla, why not offer a more affordable version, around 35,000 euros, to maintain momentum? While this may seem logical, such a strategy could prove disastrous for Tesla, both industrially and in terms of brand image.
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A profound loss of meaning?
From its inception, Tesla has made a promise: to not be a brand like any other. It does not just sell cars, but a technological and status experience. The Model Y, in its current versions, embodies this promise: impressive performance, cutting-edge technologies, a clean interface, semi-autonomous driving… Reducing this model to a discount version would be akin to removing a card from a currently shaky castle.
Tesla does not have a range of models as extensive as a mainstream manufacturer to compensate for margin losses or declining commercial interest in any of its products. Betting on a discounted version of its most profitable model would be an irresponsible risk in an economic context where every point of profitability counts.
A false response to the Chinese threat?
Tesla is now facing the rise of Chinese players like BYD, MG, Xiaomi, or Xpeng, who offer modern, well-equipped, and affordable electric vehicles. To want to respond head-on to these competitors with a downgraded Model Y would be a misreading of the market.
Chinese brands are designed from the start to produce at a low cost. They rely on optimized platforms, shared components, and specific industrial expertise. Tesla, on its part, has designed the Model Y as a technological family SUV, with high production standards. Adapting it to be a sales product would be contrary to its nature.
The logical milestone, dubbed Model 2 for years, must instead be a vehicle designed from the outset to cost less than $25,000 before taxes, with a new platform, automated production, and unprecedented economies of scale.
Releasing a low-cost Model Y today would be taking shortcuts, recycling a platform that was not designed for this use.
The Tesla customer experience would be at risk!
By introducing a stripped-down version of the Model Y, Tesla risks creating a two-tier experience within its range and fracturing the cohesion among customers. Less range, downgraded finishes, deleted options… all these elements could generate frustration and tarnish the brand’s reputation.
Panoramic glass roof, heated and ventilated seats, electric rear bench, large diameter wheels, a 16-speaker audio system, endless sensors for parking, semi-autonomous driving, heat pump, fabric seats like the Model 3 in Mexico… The list is long for downgrading the Model Y and lowering its cost price.
And what will customers who paid full price for a Model Y think when they see the residual value of their car plummet in the used market?
All these factors would be deadly for Tesla. So, when Musk explains that the affordable Tesla is the Model Y, should we believe him, or is he once again trying to sow doubt to surprise us later?
At Mobiwisy, we lean towards the latter option.
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