Tesla's Affordable Models: E41 and Redwood Explained

MAY 12.2025, By lan

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1. Introduction

According to Reuters on March 14, Tesla plans to produce a cheaper version of the Model Y at its Shanghai factory, with the internal code name E41, to respond to the price war in the Chinese market. The project will be based on the existing production line, with the goal of starting mass production in 2026.

2. Tesla's Affordable Car Strategy: A Brief History

Tesla started exploring affordable EVs in 2020. Elon Musk first mentioned a $25,000 model. The plan has changed several times. In Q3 2023, Tesla officially talked about a next-generation model. The internal code name is Redwood. The public sometimes calls it "Model 2" or "Model Q". In April 2024, Tesla said it would speed up the launch of new models. The new timeline is earlier than the second half of 2025. There were rumors that Tesla canceled the affordable model, but Elon Musk denied this. Investors are watching Tesla's product roadmap closely.

Tesla plans to use new platform technology and reuse some parts from current models. This will reduce production line changes and speed up the launch.

3. What is Project E41?

According to Reuters, E41 is the internal code for a cheaper Model Y. Tesla plans to produce it in Shanghai to fight the price war in China. The goal is to start mass production in 2026. The E41 project will use the current production line. This helps Tesla save costs and time.

In the US, the cheaper Model Y (E41) will start mass production between Q3 2025 and early 2026. Tesla aims to produce 250,000 units in 2026. The car will also be made in China and Europe later. In China, the E41 may be smaller and 20% cheaper to make than the current Model Y.

4. Predicted Features of the Cheaper Model Y (E41)

To cut costs by nearly 20%, Tesla may make several changes. Here is a table showing possible changes based on changes to Model 3 in Mexico):

Feature Current Model Y Cheaper Model Y (E41)
Seat & Interior Material Faux leather Fabric
Seat Heating/Ventilation Available Removed
Rear Entertainment Screen Available Removed
Ambient Lighting RGB Single color
Acoustic Glass All windows Only front windows & windshield
Speakers 17 9

5. What is the Redwood Project?

The Redwood Project is different from E41. Redwood is Tesla's next-generation platform. It aims to test new manufacturing methods.

The goal is to make a smaller, cheaper car. Redwood will use innovative assembly to cut costs and speed up production.

Redwood cars will be even more affordable than E41. They will focus on safety and self-driving features. The exact specs and launch date are not public yet.
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