Tesla moves closer to releasing its cheapest-ever electric SUV

The Tesla Model Y, the company's entry-level electric SUV, may be about to get even cheaper.

An Electrek report on Saturday claimed the company has started a trial production run of a rear-wheel-drive version of the Model Y Long Range. This would act as one of the last steps toward bringing such a vehicle to market. While the final price is unknown, it's almost certain to be cheaper than the all-wheel-drive version of the Model Y, which has a price of $49,990 before any savings are factored in.

The new version could bring Tesla vehicles to more buyers than ever before. One of the company's main goals is to expand from a niche automaker to a mass-market company, selling cars at cheaper price points with widespread appeal. This three-part plan started with the Model 3 sedan, an entry-level version of the Model S that hit roads in July 2017, and it continued with the Model Y in March 2020 that offers an entry-level alternative to the Model X. The plan is set to continue with the Cybertruck set for launch in late 2021.

Tesla has been pushing to introduce cars at lower price points, but it's faced some difficulties. The Tesla Model 3 was announced with a $35,000 price point, but it wasn't until February 2019 that Tesla finally delivered the vehicle. The early stages of Model 3 deliveries came during a period Musk dubbed "production hell," as the company struggled to make enough cars to meet demand.

The firm took the car off the online ordering system in April 2019, meaning buyers would have to specially request the car. The current cheapest version of the Model 3 available via Tesla's website is priced at $37,990.

The Model Y was announced in March 2019 in four versions. The cheapest version, expected in spring 2021, would have cost $39,000 and offered 230 miles of range. But in July 2020, Musk declared that this vehicle had been canceled as the range would have been "unacceptably low." The car would have had a range below 250 miles as rated by the Environmental Protection Agency.

It's unclear how much the new single-motor Model Y will cost. When the car was first unveiled in March 2019, it had a price tag of $47,000. A report from Electrek found last month that Tesla listed the vehicle on its loan calculator with a $48,000 price. That would mean it would undercut the existing Model Y by less than $2,000.

Last month, during the company's second-quarter 2020 earnings call, Musk claimed the company plans to make changes to the Model Y to make it easier to manufacture. He told investors that "the fundamental architecture of Model Y will be different" when it starts production at the under-construction Giga Berlin factory. He added that "it may look the same, but the internals will be quite different and fundamentally more efficient architecturally than what we've done to date."

During the same call, Musk also claimed that the company was currently assembling the world's biggest casting press for the Model Y in Fremont. Musk said that it's "enormous and it looks awesome."

The Inverse analysis – A cheaper version of the Model Y could prove very popular. Musk has spoken before about how, as a compact SUV, the Model Y has the potential to become an even bigger vehicle for Tesla in terms of sales figures. Musk suggested in January that demand for the Model Y could be 50 percent higher versus the Model 3.

The cancellation of the cheapest version will still be a likely disappointment for budget-conscious buyers, but it suggests that Tesla's new entry-level vehicles will deliver when it comes to range.