Tesla’s cheaper Model Y is doomed no matter what

Summary

Tesla faces plummeting sales, mostly as a result of Elon Musk, who risks tarnishing a cheaper Model Y before it ever launches.
Meanwhile, competition is intensifying at both the low and high ends of the EV market.
There are also quality control issues, and advantages Tesla once had are diminishing in importance.

What a difference a year can make. While

Tesla
had its problems in early 2024, including rising concerns about Elon Musk’s political views and business dealings, it was still the undisputed ruler of the North American

EV market
. Now, going into May 2025, sales are down so dramatically that it’s turning to tactics it might never have considered before, like launching a scaled-back version of the

Cybertruck
.

Another example is a more affordable version of its

Model Y
crossover SUV. According to Reuters sources, however, that’s been delayed several months, so the product won’t appear until sometime in 2026. But let’s be honest, here — it’s not going to move the needle, and the reasons are legion.

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The elephant in the room

A crisis that’s only just beginning

Elon Musk talking at the We Robot event on a colored background

Tesla / Pocket-lint

The major problem is a predictable one, of course: Musk. The CEO recently said he’ll be stepping back from his work with the US Department of Government Efficiency to focus on Tesla, but that’s akin to Joseph McCarthy stepping back from hunting secret communists, as far as much of Tesla’s core demographic is concerned.

The people most interested in EVs tend to be liberal and environmentally-conscious people in North America and Europe — and they’ve been boycotting Tesla in droves, upset about Musk’s support of far-right politics and savaging key government services, among other things. Some of the same people are protesting showrooms, selling Tesla vehicles and stock, or (in rarer cases) committing acts of vandalism. Even some celebrities have publicly ditched Tesla, such as Sheryl Crow and Jason Bateman.

Short of a miracle, the cheaper Model Y will be launching into a market greatly hostile to its existence.

Simply put, there are now millions of people who will never buy anything from Tesla as long as Musk is associated with the company. Musk and US President Donald Trump have tried to pitch vehicles to the MAGA crowd, but that’s likely an uphill battle, given that many Republicans still deny human-created climate change or at least support the oil and gas industries. They’re more likely to buy cheaper gas-powered cars before any EV, no matter which logo is on the back.

Musk hasn’t shown any inclination to leave Tesla, and an ouster seems improbable, at least anytime soon. There is some discontent among Tesla’s remaining investors — but there also appears to be plenty of support as well, so the company’s board of directors may not be facing enough pressure to call a vote. There’s a possibility they’ll resist until their own wealth is in serious jeopardy, which could be a while from now.

Short of a miracle, then, the cheaper Model Y will be launching into a market greatly hostile to its existence. I can’t think of a single product that’s succeeded despite being loathed by its intended buyers.

Charging two different cars with the same ChargePoint Omni Port.

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The competition factor

A reversal of fortune

Rivian

While the Model Y remains one of the most popular EVs ever made, US sales were still down 33.8% year-over-year in the first quarter of 2025, as Teslerati notes. In the critical California market, overall Tesla registrations were down 15% despite general sales of zero-emission vehicles growing 7.3%. The situation may be even more concerning for Tesla on a global level, since China’s BYD is poised to unseat it as the world’s biggest EV maker. That’s not surprising — in the domestic Chinese market, BYDs can sell for as little as $7,800. A Model Y starts at around $36,000 there.

There’s blood in the water, in other words, and shoppers are now fully aware that other EVs may be just as good or better than what Tesla is offering, certainly in terms of value. The 2025 Chevy Equinox EV — a favorite example of mine — starts at $33,600 in the US, and yet has 319 miles (about 513 kilometers) of range, nearly as good as the 327 miles (526 kilometers) on a $41,490 configuration of the Model Y. There are, potentially, other reasons to choose a Tesla, but for the average person, it’s hard to ignore that almost $8,000 price gap. A scaled-back Model Y will presumably get even less range.

Shoppers are now fully aware that other EVs may be just as good or better than what Tesla is offering.

Rival brands are also beginning to secure toeholds at the high end. Rivian’s R1T and R1S have been firmly established as Cybertruck and Model X alternatives, so it’s tough to imagine how the Model Y will compete when the more affordable R2 and R3 ship. More adventurous shoppers can choose EVs from brands like Lucid or Polestar if there’s a reliable support network nearby, not to mention auto industry giants such as BMW and Porsche.

Tesla does have wide service and Supercharger networks on its side, but even the latter isn’t the advantage it used to be. Charging networks like ChargePoint, EVgo, and Electrify America are growing their footprints, and Tesla’s once-proprietary plug format has been adopted as the universal NACS standard. The service center gap probably won’t last forever.

A pre-production Rivian R3 parked in the mountains.

I hope the Rivian R3 will be the vehicle to topple Tesla

Tesla won’t shrink and vanish in a day, naturally.

Is there hope for a turnaround?

Tesla

On top of everything else, Tesla still has a reputation for poor quality control. Edmunds notes that there have been build quality issues with every Tesla until now, including the Model Y, although it’s too early to say if changes to the 2025 model have made a difference. The Cybertruck has been problematic since launch, with eight recalls so far, not to mention the risk of severing your fingers if you accidentally close the hood on them. That’s not promising for a far cheaper vehicle.

Honestly, though, I do want an affordable Model Y to succeed if Tesla can get its house in order. There are talented people at the company who don’t share their CEO’s views, and the EV industry needs intense competition to drive prices down as far as they can go. We won’t truly be able to end fossil fuel consumption until EVs are cheap enough to hand down to high school kids.

I don’t think the odds are good, though. Even if Tesla solves build quality and delivers excellent value for the money, it will still have a tarnished brand with Musk, and people like him seldom leave power quietly.