Tesla will make a lower-cost version of its best-selling Model Y in Shanghai, three people with knowledge of the matter said, aiming to regain ground lost during a price war in its second-largest market.

Telsa plans to make a slightly smaller Model Y that costs at least 20 percent less to build than the recently refreshed Model Y.

Tesla has plans to produce a low-cost version of its best-selling Model Y to boost sluggish sales in China, according to a report. The car will cost at least 20% less to produce than the version launched last year,

Tesla sold more than 657,000 vehicles in China, which was a new record for the company. However, sales have slowed in the first two months of 2025, and a cheaper Model