Is Tesla Working on A Smaller Model Y? Leaked Images Suggest So

A mysterious Tesla prototype has been spotted at the company's Austin, Texas factory, fueling speculation that the EV giant is gearing up for its next major release. The heavily camouflaged vehicle, seen in new drone footage, has sparked fresh debate about Tesla's plans for a more affordable electric car (also known as the 'Model Q') expected to launch in mid to late 2025.

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Image by - Joe Tegtmeyer

A New Tesla in the Works?

Tesla enthusiast and drone operator Joe Tegtmeyer captured the vehicle, noting that the front, rear, and interior dash were all covered—suggesting significant design updates. While it resembles the Model Y, some observers believe it could be a smaller, lower-cost EV, aligning with Tesla's long-rumoured plans to introduce a budget-friendly model. Various reports an starting price of below US$30,000.

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Tesla has hinted at this new offering multiple times. In Q3 2023, the company stated that "preparations remain underway for our offering of new vehicles—including more affordable models—which we will begin launching in the first half of 2025." This was reaffirmed in the Q4 2023 earnings call, where CFO Vaibhav Taneja confirmed that development was on track for a mid-2025 debut.

Image by - Joe Tegtmeyer

What to Expect from Tesla's Affordable EV

Tesla has kept details under wraps, but its earnings reports provide some clues. The upcoming vehicle will integrate aspects of the next-generation platform while also leveraging existing Model 3 and Model Y production lines. This strategy is designed to streamline manufacturing, cut costs, and help Tesla price the new model lower than its current offerings.

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With Tesla's sales declining for the first time in years, a new, budget-friendly EV could be the boost the company needs to regain momentum in an increasingly competitive market.

If production stays on schedule, a launch event unveiling pricing and specifications could take place as early as Q2 2025, with deliveries following in the second half of the year.

Tesla has yet to confirm whether the camouflaged prototype is the rumoured low-cost model. Still, with development progressing, more details are likely to emerge soon.