Tesla plans to manufacture a more affordable Model Y in China, with production set to start in 2026.

The project, known as “E41,” will use existing production lines and reduce production costs by at least 20% compared to the updated Model Y launched in late 2024. The starting price for the current Model Y in China is 263,500 yuan (US$36,351).

The Shanghai facility will primarily serve the domestic market, helping Tesla compete against local EV makers.

Tesla’s market share in battery-only EVs dropped to 10.4% in 2024 from 11.7% the previous year, facing strong competition from new models like Xiaomi’s SU7 and the upcoming YU7 crossover.

While production plans for North America and Europe are being considered, no specific timelines have been shared.

Tesla has not officially confirmed the new Model Y, and CEO Elon Musk has only mentioned a new car platform in 2025 without revealing pricing or specifications.

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