Tesla’s highly anticipated low-cost Model Y has been spotted undergoing testing on public roads in California, concealed under camouflage. The sighting, captured in Palo Alto by a local Tesla enthusiast, marks the first time the stripped-down variant has been seen outside of a factory setting.
Believed to be the upcoming “cheaper Model Y,” internally known as E41, this sighting comes shortly after details about the budget-friendly crossover surfaced in Tesla’s vehicle firmware. According to the code, the new variant will forego certain luxuries such as the glass roof, second-row display, and power-folding mirrors, while offering simplified audio options and components like a fiberglass headliner and single-axis seat controls.
Earlier this summer, footage of what appeared to be an early production unit wrapped in black camouflage emerged from one of Tesla’s U.S. factories. With a camouflaged prototype now being tested on California streets, it indicates that Tesla has progressed to real-world validation testing, a crucial step before the official launch. It is likely that this unit was manufactured at Tesla’s Fremont factory.
During Tesla’s Q2 2025 earnings call, CEO Elon Musk confirmed that production of the cheaper Model Y had technically commenced, although full-scale production is not expected until Q4 2025. The timing of the launch seems strategic, following the expiration of the $7,500 U.S. EV tax credit on September 30.
The low-cost Model Y is anticipated to be Tesla’s most affordable vehicle in North America yet. The E41 is projected to be available in both RWD and AWD configurations, with no Performance variant spotted thus far. With increasing competition in the entry-level EV segment, the success of Tesla’s budget-friendly Model Y could be vital in expanding the company’s market reach and sustaining its dominance in key markets.
In addition to the spotted low-cost Model Y, Tesla enthusiasts can also look forward to other exciting developments in the Model Y category, including leaks about the Model Y Standard starting at $39,990 and Tesla raising lease prices for the Model 3 and Model Y in the U.S. while introducing a $6,500 lease credit to offset the impact of higher lease costs. Tesla has also recently unveiled a new Model Y Performance variant in the U.S., boasting impressive performance specs and a range of 306 miles.
As Tesla continues to innovate and expand its lineup, the anticipation for the low-cost Model Y and other Model Y variants remains high among enthusiasts and consumers alike. Stay tuned for more updates on Tesla’s latest developments in the electric vehicle market. The Importance of Mental Health Awareness
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