In 2025 there will not only be the Tesla Model Y Juniper – there will also be cheaper models

UPDATE: As anticipation builds for the Model Y refresh, CEO Elon Musk has also repeatedly hinted at cheaper models coming to market in 2025.

(Updates with news about Model Q. See below.)

The Model Y update is of great importance for buyers

Since the Model Y is almost five years old, an update is overdue. For many, it’s top of mind when thinking about the Y, the best-selling electric vehicle in America. And crucially important for Tesla, as the crossover is the company’s highest-volume vehicle. But it’s no big secret what Juniper – an internal codename – will be. The updated Model 3, updated in late 2023, already includes many of the changes expected in the Juniper, including body style changes (front hood, front fascia, headlights, taillights), improved aerodynamics, smoother ride, updated interior and possibly new battery technology. Of course there will be some surprises, but no revisions. See this story for a detailed list of expected changes.

But Musk has said more about a new, “affordable” Tesla

While Musk has said little about a Model Y update other than saying in June that “there is no Model Y ‘refresh’ coming out this year,” he and other executives have spoken several times about a new affordable vehicle. As recently as October’s third-quarter earnings call, Musk said, “We are still on track to deliver our affordable models beginning in the first half of 2025” – after saying more or less on the second-quarter earnings call in July less had said the same thing.

Although there is no official name from Tesla, analysts often use the Model 2 moniker to identify the car. “The vehicle being introduced could have a dual purpose for consumer sales and robotaxi use,” Stephanie Brinley, an analyst at S&P Global Mobility, told me earlier this year. That means the car could be part of Tesla’s fully autonomous ride-hailing vehicle strategy (aka cybercab/robotaxi), which is Musk’s main obsession.

UPDATE: a new report (via Teslarati) claims Tesla plans to launch the Model Q, an affordable electric vehicle priced under $30,000, in the first half of next year to compete with vehicles like the low-cost BYD Dolphin. However, without the federal tax credit, the price of the vehicle will rise to over $37,000 (more on that below).

What can buyers expect?

For the consumer, an affordable Tesla means something cheaper than the cheapest Tesla currently on offer, which, including the $7,500 federal tax credit, is $35,000 to $36,000 for a Long Range Rear Wheel Drive Model 3.

“In about three years, we are confident that we can make a compelling $25,000 electric vehicle that is also fully autonomous,” Musk said in 2020. Today we are probably talking closer to $30,000. However, Musk was pretty vague about the pricing details, although he did mention the range between $25,000 and $30,000.

Is the $7,500 credit included?

What is increasingly uncertain is the fate of the federal $7,500 electric vehicle tax credit. That’s a critical component to bringing electric vehicle prices below $40,000 and presumably bringing a new affordable Tesla under $30,000. And the credit’s price-deflating effect not only helps Tesla, but is also a major factor in sales of General Motors’ growing inventory of Chevrolet and Cadillac electric vehicles, GM-made Honda electric vehicles, and future Ford and Rivian electric vehicles.

The problem is that President-elect Donald Trump’s transition team is exploring the possibility of eliminating the tax credit. This is evident from recent reports, particularly those from the New York Times, “Trump Wants to Kill the EV Tax Credit,” and Reuters. It quoted people who had knowledge of the plans. Musk slyly said in July that he supported ending the loan – that there would be “some impact, but I think it would be slightly devastating for our competitors and for Tesla.”

Trump can’t simply turn off the tap unilaterally because Congress would have to intervene, but for consumers who want to guarantee they can save $7,500 on the price of an electric vehicle, timing is crucial. “Buy before January 20th” could be the motto.

“The Trump administration’s potential elimination of the federal electric vehicle tax credit — without any other incentive to replace it — could derail the trajectory of electric vehicle sales in the United States,” Jessica Caldwell, head of insights at Edmunds, said in a statement.

(Updated December 9, 2024)