Tesla plans to build a Model Y priced at 150,000 yuan by cutting configurations wherever possible.

The long - rumored affordable Tesla model is finally no longer a false alarm, but its true identity may surprise many:

This is not a brand - new product developed from scratch, but a streamlined version based on the Model Y.

Before unveiling the mystery of this car, it's necessary for us to clarify the "one - two punch" Tesla is about to throw in the Chinese market to avoid information confusion.

Plan A is an upward attack. In response to the unique travel needs of large families in China, Tesla has prepared the Model Y L, a long - wheelbase model with a six - seat layout, targeting the high - end family SUV market above 300,000 yuan.

Model Y L

Plan B, on the other hand, is a downward plunge, which is the protagonist of today's story - the "budget version" of the Model Y. Its mission is the opposite, aiming to help Tesla seize the much larger but more competitive mass market.

The rumor of this budget model was confirmed by Elon Musk himself at Tesla's second - quarter earnings conference not long ago. He clearly gave a timeline for the first time, confirming that this new car will go into mass production in the second half of this year and be officially launched in the fourth quarter. He also said bluntly that this new car "looks a lot like the Model Y".

Spy photo of the budget version of Model Y

So far, all the clues point to the same conclusion:

Tesla's next ace in the hole is a Model Y that we are both familiar with and strange about.

An even more "basic" "shell apartment"

Contrary to the Model Y L, which is lengthened for more space, the body length of the budget version of the Model Y is significantly shortened. At the same time, in terms of exterior details, it abandons the complex lamp group design of the refreshed Model Y and replaces it with simpler split - type headlights and taillights, similar to the current Model 3.

Model 3

Refreshed Model Y

Compared with the exterior, the interior changes better reflect its positioning. Tesla's iconic panoramic glass sunroof is directly removed and replaced with a regular roof, and there is not even a reserved space for a sunroof.

Spy photo of the interior of the budget version of Model Y

Although Tesla's panoramic sunroof has been criticized for many years, it has to be said that for Tesla, the panoramic sunroof is not just a configuration, but one of the core designs to define "futuristic" and "technological" feelings. Removing it not only saves a large amount of cost but also represents a compromise in terms of the brand.

Also discarded are the rear - seat entertainment screen, which was added as a highlight in the new Model 3/Y, and the ambient light strip running through the center console.

Spy photo of the interior of the budget version of Model Y

Not only that, signs of cost - cutting are everywhere in the new car's cabin. The tweeter on the A - pillar is removed, which means the audio system will be downgraded; the seats are changed from leather to fabric, and the center console is also replaced with a through - type one, making the structure simpler.

Fabric seats of the Mexican - version Model 3

In short, the few "luxury elements" on the Model Y have been mercilessly stripped away by Tesla.

But there is one thing that Tesla still adheres to, and that is FSD.

This budget - version model will be fully equipped with the same AI4 hardware as the existing models and the front - bumper camera for more advanced driver assistance. With these, it retains all the possibilities of FSD.

Tesla's cost - cutting logic is clear: all physical configurations related to driving and comfort can be compromised, but the core computing power and perception hardware related to future intelligence, especially those with potential for software payment, must be retained.

When such a Tesla with significantly simplified hardware configuration is launched into the market, its price naturally becomes the biggest mystery. Currently, the industry generally predicts that its selling price will fall in the range of 150,000 to 200,000 yuan, which is undoubtedly a highly market - impactful pricing.

An inevitable compromise

The second quarter of this year was a crucial period for Tesla to stop the bleeding.

The recently released earnings report shows that although the quarterly revenue of $22.5 billion hit the largest year - on - year decline in recent years, it rebounded by 16% quarter - on - quarter, which relieved the capital market. Among them, the automotive business contributed $16.7 billion, with a quarter - on - quarter increase of 19%, temporarily pulling Tesla out of the "worst - ever" situation in the first quarter.

The core hero that helped Tesla stabilize its position is the refreshed Model Y, which many people think is a "pointless upgrade".

This seemingly mediocre facelift at the product level is still remarkable at the business level. By slightly increasing the price, it raised Tesla's average selling price per vehicle from 274,500 yuan in the first quarter to 293,900 yuan, and pulled the gross profit margin of the automotive business back from 16.2% to 17.2%, temporarily halting the downward trend.

In the Chinese market, the delivery volume of the refreshed Model Y quickly exceeded 6,000 units, leading the sales list in the 250,000 - 350,000 - yuan price range in the first half of the year. It can be seen that even with slow product iteration, the Model Y platform still has strong market appeal and profitability.

This leads to a core question: since the price - increased Model Y can sell well, why does Tesla go against the trend and launch a budget model that may significantly lower the average selling price per vehicle?

The answer is that neither of Tesla's two planned new growth curves has materialized as expected.

The highly - anticipated Cybertruck, in the world's largest pickup truck market in the United States (with an annual sales volume of over 2 million units), has a conversion rate of only about 2% for its astonishing one - million pre - orders, far from being able to take over from the Model Y as the new "volume - selling hit".

The other line is the budget model that Elon Musk presented as early as the 2020 Battery Day.

In his vision, with the 4680 battery cells, CTC assembly process, and integrated casting technology, the new model could not only significantly reduce weight but also cut the cost in half, with a selling price of only $25,000. However, due to bottlenecks in key technologies such as batteries, this car has been delayed for a long time.

With both new growth points frustrated, further exploring the most successful Model Y platform has become the most practical, and perhaps the only option. Derive the Model Y L upwards to target the high - end market, and launch the budget version downwards to ensure sales volume, using one platform to fight three battles.

Behind this, there is also deeper financial pressure. Tesla is pouring huge amounts of capital and R & D efforts into the fields of artificial intelligence, robotics, and autonomous driving, which have longer return cycles.

Robot in a Tesla restaurant

In 2024, its capital expenditure exceeded $10 billion, and in June this year, it announced an additional investment of about $8 billion. The huge investment has caused its free cash flow to decline from $2.7 billion in the third quarter of last year to about $150 million in the second quarter of this year.

Tesla's automotive business has to "transfuse blood" for Musk's AI dream. That's why the budget - model project has been downgraded from the original plan of "adding production lines for a new platform" to the plan of "transforming existing production lines".

Ultimately, the birth of this budget version of the Model Y is a crucial trade - off that Tesla has made between the grand AI narrative and the harsh reality.

This article is from the WeChat official account "Dongchehui", author: Li Hua. Republished by 36Kr with permission.