Tesla is preparing to release a lower-cost version of its Model Y in China, following a brief listing on the company’s local website. The move comes as Tesla faces increased pressure from domestic rivals like BYD, which overtook Tesla in global electric vehicle (EV) sales in 2025.
Budget Model Details
The Standard Range Model Y, already sold in the US, appeared on Tesla China’s charging webpage before being removed. According to Tesla staff, as reported by Chinese social media user Anting Dafan, both the Model Y and Model 3 will receive budget variants, with the Model 3 expected to launch first.
Performance will be reduced in the budget version: acceleration from 0-100 km/h will take 7 seconds, up from 5.9 seconds in the standard rear-wheel drive model. EPA-rated range will also decrease, from 575 kilometers to 517 kilometers.
Feature Simplification
Tesla is simplifying the vehicles to lower costs: the front light bar will be removed, power-adjustable mirrors will be replaced with manual ones, double-layer laminated glass will be eliminated, and power-adjustable seats will be swapped for manual controls. Lane-keeping assistance will be retained, but lane-centering functionality will not.
These changes represent a broader product strategy to target price-sensitive segments while leveraging the Tesla brand. When produced locally in China, the budget Model Y is estimated to cost around 200,000 yuan (approximately $28,500 USD).
Market Context and Implications
Tesla’s move comes after BYD surpassed it in global EV sales in 2025, selling 2.26 million units versus Tesla’s 1.64 million. This shift is partially attributed to Tesla’s lack of affordable options: for a long period, it has not offered models under $30,000 USD, leaving a gap in the competitive market.
The launch of budget versions of the Model 3 and Model Y is an attempt to recapture lost ground in the crucial Chinese market, but its success remains uncertain given the intense competition at this price point.
The Chinese EV market is particularly competitive, and Tesla’s new strategy is a direct response to this pressure. Whether the budget models will significantly increase sales remains to be seen, but they represent a clear effort to adapt to changing market dynamics.
