Tesla’s discount Model Y-based EV debuts tomorrowThe company’s new model should start under $40,000Tesla’s new EV enters a highly competitive field, with OEMs offering steep incentives for buyers
Tesla appears set to reveal its cheaper, more budget-friendly take on the existing Model Y tomorrow. Teasers posted to CEO Elon Musk’s website, X (née Twitter), show the new EV’s headlights, while other teasers uploaded to the company’s social media accounts hint at other design aspects of the upcoming EV.
What To Expect From The Cheap New Tesla
— Tesla (@Tesla) October 5, 2025
At the end of the teasers, the video fades to black with “10/7” shown on-screen. It’s hard to imagine this is anything but tomorrow’s date. Pricing on the model has already leaked, and if those rumors are true, expect a starting price under $40,000. That, plus other details on the model made their way onto social media this month as a result of updates to the Tesla website’s source code.
The new EV should be available with up to two electric motors, likely offering both rear- and all-wheel drive options for buyers. The EV will also feature a new front fascia to help it stand apart from the Model Y. Tesla also took a few design features away from the Model Y to help drive down costs, like the EV’s front light bar and glass roof. It’s also rumored the headlights will use an all-in-one construction, incorporating all required lighting elements into a single unit, again with the intention of cutting costs.
Tesla’s Cheap New Car Enters A Crowded Market
Tesla
Despite its more budget-friendly price point, the latest Tesla will enter a crowded market. Several automakers offer EVs around the $40,000 mark, and others have found ways to extend discounts to buyers as federal incentives on electric cars expire. Hyundai cut Ioniq 5 prices recently, with base model prices under the $40,000 mark. Ford’s Mach-E also starts just under $40,000 MSRP. The brand, along with General Motors, have been able to buy up their own inventory at subsidized prices before leasing them back to consumers, essentially extending federal incentives for buyers who lease from both brands. It’s not clear yet if Tesla will be able to match these manouvers to entice buyers.
Tesla
With such strong competitors produced domestically, Tesla doesn’t have the advantage it once did in the EV space. Other automakers have long since caught up, with production on US soil to dodge tariffs, larger and more efficient batteries, and long warranty periods (in the case of both Hyundai and Kia). The new Tesla will have to offer similar benefits while delivering on build quality, performance, and efficiency to stand a chance against well-established competitors like the Kia EV6.
