Is Tesla set to launch a cheaper EV soon? Here's why a sub-£28k model is on the cards...

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It looks like Tesla will enter the cheap EV market soon – if Elon Musk's latest company update is anything to go by.

In Tesla's latest quarterly earnings call the unpredictable chief executive doubled down on bringing more 'affordable' Tesla electric cars to the market, with production slated for the first half of 2025.

While details are thin on the ground, rumours have it the first affordable model will cost around £28,000 and be based on the Model 3 (and maybe Model Y).

Tesla has previously said it will make more price accessible electric cars in 2025.

During the Cybercab concept reveal last year a statement said: 'Preparations remain underway for our offering of new vehicles – including more affordable models – which we will begin launching in the first half of 2025.'

While the timeline can shift and very likely will, the strategy to bring down the cost of EV ownership seems to remain consistent.

Tesla has said an affordable EV will be coming off its production line soon, with a 2025 arrival expected - but how realistic is this?

Currently Tesla's cheapest car in the UK is the £39,990 Model 3.

That's £24,995 more expensive than the current cheapest new EV in the UK, the Dacia Spring, which costs £14,995.

While there is a difference in quality, range, tech, luxury, safety and charging capabilities between the two models, the price difference shows budget new EVs can be achieved.

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Five budget EVs coming soon including a £17k Renault Twingo and £22k Fiat Panda

There's a wave of new affordable EVs entering the market at the moment, with many brands – Renault, Citroen, Cupra, VW and Fiat to name a few - entering the market with sub-£25,000 models arriving this year.

Some models such as the forthcoming Renault Twingo will cost £17,000.

While Tesla's cheaper model, which is rumoured to be a hatchback version of the Model 3, and has been dubbed the 'Model 2', is likely to be in the upper-mid £20,000s rather than the sub £20,000 price point, it will still offer a much more accessible price point to the luxury American EV manufacturer, and could signal even cheaper Teslas arriving in the future.

It will also help Tesla compete against the onslaught of cheap Chinese EVs from the likes of BYD (Build Your Dreams) and SAIC Motors which owns MG.

Tesla CEO Elon Musk made the statement about cheaper Tesla during Tesla's latest earnings report

Fiat's new Grande Panda EV will cost from £22,000 when it arrives this year

The production ID2all will cost roughly sub-£21,150 (€25,000) and will be bigger than the Polo

The Renault Twingo will also give you around 185 miles of range, five-door practicality but will only cost £17,000

Tesla held the title of being the world's largest EV provider for around a decade but last year lost the title to China's BYD. 

Tesla's sales also fell in 2024 for the first time in over a decade to 1.79 million cars.

This was despite aggressively price slashing.

In January 2023 Tesla slashed the price of its electric cars in the UK, lowering prices by as much as £9,100 due to 'normalisation' of some of the cost of inflation.

A move into more affordable EVs then could help reassert Tesla ahead of its Chinese rivals, as Musk's talk of the new cheaper model came hand in hand with the announcement that the company had missed its Q4 2024 revenue expectations.

Last October Tesla said: 'We need to make EVs affordable for everyone, including making total cost of ownership per mile competitive with all forms of transportation.' 

The upgraded Model Y will be delivered to the UK in a Launch Series specification from May

A new lower budget Tesla would follow the new Tesla Model Y hitting salerooms - the first time Tesla's worldwide best-selling model has been updated since it first launched in 2019.

As well the more affordable EVs, Musk also promised that Tesla's Unsupervised Full Sell-Driving will launch as early as June in Austin, Texas. 

But it will only be a 'paid service' rather than available to customers who've already parted with cash to unlock the software itself, as it will be a separate entity to Fully Self-Driving software that is customer-focused.

The robotaxi fleet won't include the newly-unveiled Cybercab which isn't expected until 2026  - instead it will offer a similar service to Waymo self-driving taxis that operate in four US cities already. 

If the cheaper Tesla does indeed arrive this year its closest rival in pricing and body style will be the £26,995 MG 4.