Tesla Launches Cheaper Model Y Amid Sales Slump

Tesla has confirmed that its new affordable offering is a stripped-down version of the Model Y SUV, not a separate new model. Production started in June 2025, with sales expected to begin in the fourth quarter as Tesla attempts to address falling demand and intensifying competition. The move follows the global release of a refreshed Model Y earlier in the year, but demand for the vehicle remains weak. Financial results for Q2 2025 showed a 12% drop in revenue and a 16% decline in profits, driven by lower sales, reduced electric car credits, and shrinking government incentives, particularly in the US. Immediate availability of the new Model Y variant and continued declining sales have raised doubts about its potential to reverse Tesla’s negative trends. CEO Elon Musk has acknowledged ongoing challenges, warning of difficult quarters ahead.