Tesla mentioned that it will apply the lessons learned from the development of its next-gen mass market vehicle platform to lower the production costs of the upcoming Model Y Juniper refresh.

Tesla's next vehicle generation unboxed process was originally supposed to serve the production of the autonomous Robotaxi, as well as its cheapest Model 2 Redwood that was put on the back burner to prioritize the Cybercab servicelaunch.

During the last quarterly conference call, however, Elon Musk tipped that Tesla will be announcing a cheaper modelnext year, and now sources from the Chinese supply chain corroborate that info.

Tesla Model 2 will be a compact Model Y Juniper

The Tesla Model Y Juniper will reportedly come in three different sizes. Apart from the regular 5-seat Model Y Juniper to be released in the January quarter, Tesla is apparently preparing a 7-seat Juniper that may come in Q4 of 2025 with larger dimensions, possibly for the Chinese market first.

The most compact version of the Model Y Juniper, however, is slated for a 2026 release, but Tesla will announce it next year, and will start production prep in Q3 of 2025.

The Model 2 has long been rumored to resemble a smaller Model Y, rather than a shrunken Model 3, so the report jibes with previous tips about Tesla's upcoming cheapest vehicle.

Moreover, the supply chain sources confirmed that Tesla will use the "two-box" approach to crafting the Model 2 after the Model Y design. They are probably referring to a version of Tesla's modular "unboxed" process for making vehicles on the cheap where it will gigacast the front and rear body sections separately, like it does for the Model Y or the Cybertruck.

Back in January, Reuters reported that Tesla has given up on thefull-body gigacastingplans for the Robotaxi, as it wanted to use its current equipment and facilities instead of embarking on big capital expenditures for a yet unproven production method.

Since parts of the unboxed process that make sense for lowering production costs will also be used for the Model Y Juniper assembly, Tesla can easily do all of its sizes in its current facilities., which is one of its approaches for making manufacturing cheaper.

It remains to be seen if that will also lead to lower Model Y Juniper prices, but the 2026 Model 2, or whatever it gets named, will certainly launch as the cheapest Tesla vehicle with pedals and steering wheel. The compact Model Y Juniper wannabe will be "smaller, to be clear," as per Elon Musk, but may borrow some of the best technology from the Cybertruck, such as the 48V low-voltage architecture.

The Model 2 could also come with a 53 kWhbattery pack, which would be enough for about a 250-mile rangegiven its reduced weight. It may also sport a new LFP battery chemistry that will allow 15-minute charging,and Tesla could further lower its price by making its nextHW5FSD suite optional for the Model 2.

With the Model 2 release date, specs, and design largely taking shape, price remains the only mystery, though Tesla's cheapest car has been rumored to cost between $22,000-$25,000 before any subsidies.

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