Tesla Reportedly Developing Cheaper Model 3, Model Y in China — But Retail Leans Bearish

Tesla is reportedly accelerating work on two lower-cost vehicle variants in China as it looks to boost sales and expand its lineup in global markets.

Tesla China is apparently developing two new projects, codenamed E41 and D50, which are simplified versions of the Model Y and Model 3. Both projects have entered validation testing, reusing design and testing data from existing models, and could enter production around mid-2026 or later, CnEVPost reported, citing local outlet 36kr.

Tesla’s Shanghai factory supplies vehicles to both Chinese and European markets, and the launch of these stripped-down versions is seen as groundwork for introducing more affordable models in those regions. 

The company recently introduced “Standard” variants of the Model 3 and Model Y in North America, cutting prices by $5,000–$5,500 by removing or simplifying over 20 features. These variants will debut in Europe between November and December 2025, according to Tesla’s regional sites.

Earlier this year, Tesla China reportedly led the development of a low-cost Model Y using a “depop” strategy, which simplifies configurations while keeping core functionality intact. However, that plan was delayed after Tesla launched the six-seat Model Y L in China in August, which saw strong demand.

The latest move suggests Tesla is refocusing on affordability amid slowing growth. The company also plans to restart development of its NV91 and NV93 projects, which are new models smaller than the Model Y. The NV91, often referred to as Tesla’s $25,000 car, was originally scheduled for mass production in August but was paused in February 2024.

On Stocktwits, retail sentiment for Tesla was ‘bearish’ amid ‘low’ message volume.

Several users were upbeat on Tesla, calling it a “must-own” stock and predicting that shares could climb to $500 soon. 

However, one bearish watcher warned that when the bulls start celebrating, the stock often heads lower.

Tesla’s stock has risen 8% so far in 2025.

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