TLDR
- Tesla is expected to unveil a lower-priced Model Y on October 7, 2025, after teasing the announcement on X over the weekend.
- The company posted two teaser videos showing headlights and a spinning wheel, generating excitement among investors and fans.
- Tesla canceled plans for an all-new $25,000 vehicle last year, and this new model will be based on existing manufacturing platforms instead.
- U.S. EV tax credits of $7,500 expired at the end of September 2025, effectively raising prices and creating pressure for more affordable options.
- Tesla’s global sales declined in 2024 and are on pace for another decline in 2025, including the first-ever annual decline in China sales.
Tesla is expected to unveil a more affordable version of its Model Y SUV on Tuesday, October 7, 2025. The announcement comes after the company posted two teaser videos on X over the weekend.
— Tesla (@Tesla) October 6, 2025
One video showed headlights peering through darkness with swirling smoke. The other featured what appeared to be a spinning wheel or fan with the Tesla logo. Both clips ended with “10/7” in U.S. date format.
The stock jumped 5.45% on Monday following the teasers. Shares closed at $453.25, up $23.42 from the previous session.
This launch represents a shift from CEO Elon Musk’s original plans. Last year, Reuters first reported that Tesla canceled development of an all-new $25,000 electric vehicle. The new model will instead be based on current manufacturing and design platforms.
Musk has been promising mass market vehicles for years. The pivot to a stripped-down existing model might disappoint some fans who hoped for something completely new.
🚨 BREAKING 🚨
Tesla to reveal new affordable Model 3 and Y Standard TOMORROW during their event.
Things to note:
– Both cars will be in the $30k range.
– Both cars to get ~320 miles of range.
– 3 will have glass roof, Y will not. pic.twitter.com/tVoLhYvAOs— CheapTeslas (@CheapTeslas) October 7, 2025
The timing couldn’t be more critical for Tesla. Vehicle sales declined globally in 2024 and are tracking toward another decline in 2025. China sales are headed for their first annual drop ever after years of growth.
Pricing and Tax Credit Impact
Late last year, Musk said the vehicle would be priced below $30,000 including U.S. EV tax credits. But those credits expired at the end of September 2025, effectively raising prices by $7,500 overnight.
The average transaction price for a new EV is around $57,000 before any credits, according to Kelly Blue Book. Traditional gas-powered cars average closer to $49,000. A nicely equipped Model Y currently starts at about $49,000.
“The desire to buy the car is very high. Just that people don’t have enough money in the bank account to buy it,” Musk said during Tesla’s second-quarter earnings call in July. “So the more affordable we can make the car, the better.”
The company said it made “first builds” of the vehicle in July. Production was initially promised by the end of June but got delayed. Tesla said the car would be available to customers sometime in the fourth quarter.
Sales and Margin Pressures
Tesla’s automotive gross profit margin excluding regulatory credits fell to about 15% in the second quarter. That’s down from a peak of 30% in the second quarter of 2022.
Back then, average selling prices were higher and interest rates were lower. Tesla also represented a larger share of the overall market and could easily sell every vehicle it produced.
Competition has grown rapidly, especially in China and Europe. Musk’s far-right political views have also hurt brand loyalty in some markets. EVs typically account for 8% to 10% of new-car sales in the U.S.
Earlier this year, Tesla launched a refreshed Model Y with improvements including new light bars and a rear touchscreen. Sources told Reuters the company also plans a stripped-down version of its Model 3 sedan.
One risk is that a lower-priced Model Y could steal sales from higher-priced versions. If the new model is the same size and shape as the existing Y, customers might opt for the cheaper option instead of spending more.
Neither Tesla nor influencers have indicated an in-person event is planned. This contrasts with previous major launches that featured big presentations. Analysts, investors and fans still expect some kind of announcement on Tuesday.
The expiration of the $7,500 federal EV tax credit helped push quarterly sales to a record at the end of September. Buyers rushed to take advantage before the credit disappeared. Expectations are that sales will slow for the rest of the year unless the affordable car provides a boost.
Musk has been pivoting Tesla toward artificial intelligence, focusing on robotaxis and humanoid robots. But affordable vehicles remain key to the company’s goal of delivering 20 million vehicles over the next decade. That target is one of several milestones tied to Musk’s proposed $1 trillion pay package.
Stay Ahead of the Market with Benzinga Pro!
Want to trade like a pro? Benzinga Pro gives you the edge you need in today's fast-paced markets. Get real-time news, exclusive insights, and powerful tools trusted by professional traders:
- Breaking market-moving stories before they hit mainstream media
- Live audio squawk for hands-free market updates
- Advanced stock scanner to spot promising trades
- Expert trade ideas and on-demand support
