Tesla reportedly producing cheaper Model Y to boost sluggish sales in China

Tesla has plans to produce a low-cost version of its best-selling Model Y to boost sluggish sales in China, according to a report.The car will cost at least 20% less to produce than the version launched last year, and will be manufactured on existing production lines, sources with knowledge of the matter told Reuters.Mass production of the low-cost vehicle – codenamed “E41” – will start at Tesla’s largest factory by output in 2026, according to the report.Elon Musk’s electric vehicle company has faced slumping sales in China – its second-largest market – as demand slowed and local competition ramped up from rivals like Warren Buffett-backed BYD.The new, low-cost Model Y will mainly be sold in China, but it will also be produced in Europe and North America, according to the report.Musk in January said the company would be introducing lower-cost models in the first half of 2025. Tesla’s Model Y, a fully electric mid-sized SUV crossover, currently starts at $36,351 in China.It was China’s best-selling car in 2023 and 2024, but has faced more low-cost competition from Chinese rivals, and analysts have warned that Xiaomi’s YU7 crossover – set to launch this year – could further threaten Tesla’s sales.Xiaomi’s newest model is expected to cost around $34,500, according to CarNewsChina, an English-language news site on the Chinese auto industry.Xiaomi is the world’s third-largest smartphone maker.The Chinese tech giant only started selling cars in April, but its SU7 sedan has outsold Tesla’s Model 3 on a monthly basis since December.Tesla’s market share in China’s electric car market dropped to 10.4% last year from 11.7% the year before.Meanwhile, Tesla is on shaky ground at home as Musk’s ties to President Trump as the face of his cost-cutting committee have hit the company’s stock.Shares in Tesla soared last year after Musk started campaigning with Trump, endorsing his run for a second term – even as the carmaker suffered its ...