Tesla Teases Cheaper Model to Break Sales Slump
By Reuters | 06 Oct, 2025

The end of the $7,500 tax credit last month that drove a sales bump is expected to put long-term downward pressure on Tesla EV prices.

The Tesla logo is seen on a car at the Paris Games Week (PGW), a trade fair for video games in Paris, France, October 27, 2024. REUTERS/Sarah Meyssonnier

Tesla teased an October 7 event, in which investors and analysts anticipate a more affordable model to sustain sales momentum, sending the shares of the Elon Musk-led electric automaker 3% higher in early trading on Monday.

In a nine-second video posted on social media platform X on Sunday, Tesla showed a vehicle with its headlights illuminated in a dark setting, while hinting at an event set for Tuesday in a separate video that had "10/7" at the end.

Tesla has previously delayed rolling out a lower-cost version of the Model Y in the U.S. It said in June it had made "first builds" of the vehicle, but would start selling it in the fourth quarter and ramp up output at a pace that would be slower than planned.

The stripped-down version is designed to be roughly 20% cheaper to produce than the refreshed Model Y and could scale to about 250,000 units a year in the U.S. by 2026.

"Tesla is teasing something big as a flurry of X posts has fans bracing for what looks like the launch of a more affordable Model Y tomorrow," said Matt Britzman, senior equity analyst, Hargreaves Lansdown, who personally owns Tesla shares.

"The price tag will be the real tell, offering clues on how far Tesla has pushed cost savings and how much new demand it can unlock."

The teaser follows Tesla's record third-quarter deliveries, driven by a surge in EV purchases ahead of the expiration of the $7,500 U.S. EV tax credit on September 30. However, analysts expect sales to drop off in the coming months without the incentive.

Wall Street expects Tesla's deliveries to jump next year to 1.85 million vehicles, with the cheaper model accounting for 155,610 units in 2026, according to Visible Alpha estimates.

The company has not introduced a new mass-market vehicle in years, relying heavily on incremental updates to the Model 3 and Model Y to drive sales.

Sales of its last major launch, the Cybertruck, have struggled, with Tesla offering thousands of dollars in discounts for vehicles in inventory in the past few months. 

A U.S. recall filing in March showed 46,096 Cybertrucks had been built between its introduction in November 2023 and early this year.

(Reporting by Mrinmay Dey and Akash Sriram in Bengaluru; Editing by Jamie Freed, Mrigank Dhaniwala and Arun Koyyur)