Will Tesla Ever Release a $25,000 Model 2 EV? Here’s What We Know

Tesla has long been a leader in the electric vehicle (EV) world, known for its high-performance cars, cutting-edge technology, and—let’s be honest—premium price tags. But for years, there’s been talk of a more affordable Tesla, one that could finally make EV ownership accessible to a much wider audience.

So, what’s the deal with the rumored $25,000 Tesla? Is it coming anytime soon, or is it just another idea that won’t make it past the drawing board? Let’s break down the latest updates, challenges, and whether we should actually expect to see this budget-friendly EV hit the market.

Where Did the $25,000 Tesla Idea Come From?

This isn’t some internet rumor. The idea of an affordable Tesla dates back to 2020 when Elon Musk took the stage at Tesla’s Battery Day event. He announced that advancements in battery tech and manufacturing would allow the company to build an EV for just $25,000 within three years.

Fast-forward to March 2025, and we’re still waiting. With no official launch date and limited concrete details, speculation continues to swirl around Tesla’s plans for an entry-level EV.

What Could a $25,000 Tesla Look Like?

Tesla has been tight-lipped about specifics, but experts have some educated guesses. If this car ever becomes a reality, here’s what it might offer:

• Compact Size: Likely a hatchback or a small sedan, something along the lines of a Volkswagen ID.3 or BYD Dolphin.
• New Battery Tech: Tesla’s 4680 battery cells could be key to keeping costs low while maintaining a solid range.
• Minimalist Design: Expect a sleek, simplified look, similar to the Model 3 and Model Y, but even more stripped down.
• Smart Features: Even as a budget model, Tesla could include Autopilot, over-the-air updates, and other software perks.
• Decent Range: Most predictions suggest at least 250 miles per charge, which would make it competitive with other affordable EVs on the market.

Why Hasn’t Tesla Released It Yet?

If the plan was to launch within three years, why are we still waiting? Several factors have slowed down progress:

1. Battery Costs

Tesla has made huge strides in battery development, but bringing costs down to make a $25,000 EV profitable is still tricky. Raw materials like lithium and nickel are expensive, and price fluctuations make affordability a moving target.

2. Production & Supply Chain Issues

While supply chain issues have improved compared to previous years, scaling up production for a new model at a low cost remains a challenge. Tesla continues to prioritize its best-selling vehicles, like the Model Y and the newly launched Cybertruck.

3. Tesla’s Current Focus

Right now, Tesla seems more interested in expanding production for the Model Y and refining its Full Self-Driving (FSD) technology. Additionally, the company has been pushing forward with its Robotaxi program, which could indicate a shift away from traditional budget EVs.

4. Profit Margins

Tesla enjoys some of the highest profit margins in the auto industry. A $25,000 car would bring those margins down significantly, which may not align with the company’s current financial strategy.

Is Tesla Secretly Working on It?

Despite the delays, reports suggest Tesla is still developing this affordable EV, possibly under the codename “Model 2.” Leaks hint that it’s being designed at Tesla’s Gigafactory in Shanghai, which could become its main production hub.

However, Musk has remained vague. In a recent earnings call, he avoided giving a clear answer on Tesla’s plans for a $25,000 car, instead emphasizing the company’s focus on AI and self-driving technology. This has led many analysts to believe that Tesla may prioritize autonomous vehicles over entry-level EVs.

Will a $25,000 Tesla Ever Happen?

The short answer? Maybe—but not anytime soon. Tesla has the technology to make it happen, but whether it fits into their business strategy is another story.

If it does go into production, it will likely start in high-demand markets like China and Europe before making its way to the U.S. However, with Musk’s growing focus on AI, Full Self-Driving (FSD), and robotaxis, a budget-friendly Tesla might not be a top priority right now.

For now, EV buyers looking for an affordable option may need to turn to other automakers who are leading the charge for budget-friendly electric mobility.

Please sign up for our newsletter and never miss any EV Updates, Blogs, EV news, and Articles.

📩Sign Up Here

It’s FREE!