In times of increasing competition in the electric car market, Tesla brings fresh wind: A stripped-down Model Y, which is supposed to be about 20% cheaper, is in the starting blocks - and is also coming to Europe. This model, known under the project code E41, could recapture Tesla's market shares after the company lost ground in China.
Background: Competition and market changes in China
The price war in China is intensifying as local manufacturers increasingly push into the mass market. Tesla's share of the purely battery-electric vehicle market fell from 11.7 to 10.4 percent in 2024. With the introduction of the new, cheaper Model Y, Tesla is responding to this pressure. Production takes place in Gigafactory 3 in Shanghai - the world's largest passenger car market - where the company is already relying on modern production lines.
The new project E41
The stripped-down Model Y is expected to cost around 20% less than the currently cheapest variant of the Chinese Model Y. While the entry price of the current version is around 263,500 Renminbi (approximately 33,570 Euros), a 20% price reduction would lead to a final price of about 27,000 to 29,000 Euros.
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Size reduction:
Due to its smaller size, the model is almost perceived as an independent vehicle. -
Objective:
Tesla aims to lead the price war not only in China but also in Europe and North America and to attract new customer segments.
Strategic importance for Europe and North America
Although the project was primarily developed for the Chinese market, Tesla plans to establish corresponding production capacities in Europe and North America as well. A cheaper Model Y could further boost the mass market for electric cars there.
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Competitive advantage:
Compared to competitors like Xiaomi, whose electric SUV YU7 is already offered in China from around 38,000 Euros, the new model offers a significant price advantage. -
Future prospects:
Tesla CEO Elon Musk announced in January 2025 that cheaper models would be introduced in the first half of 2025 - however, specific details are still pending.
Conclusion
Tesla is responding to the intense price competition in China with a strategically important step: a stripped-down Model Y, which is about 20% cheaper and potentially sold for under 30,000 euros. This step could not only revitalize the Chinese market but also allow Europe and North America to benefit from attractive electric vehicles. For Tesla, this means an opportunity to regain lost market share and pave the way for broad mass acceptance of electromobility.
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