A cheaper Tesla Model Y is coming

Tesla began promoting its new base Model Y in social media posts over the weekend, the people, who spoke on condition of anonymity and shared private information, said. The sources said the cheaper vehicle will lack certain features and use lower-quality materials to offset the loss of a federal tax credit of up to $7,500, which the U.S. stopped offering this month.

SHARES RISE Tesla representatives did not respond to requests for comment. The company's shares in X helped its shares gain 5.4 percent yesterday. The stock has gained 12 percent this year. Tesla executives said on the company's last earnings call that production of a more affordable model began in June but decided to delay ramping up production until the U.S. phased out the tax breaks. Chief Financial Officer Vaibhav Taneja and Tesla's vice president of vehicle engineering, Lars Moravy, were both secretive about what the vehicle would be like before Elon Musk made the announcement.

"I'M GOING TO LET THE CAT OUT OF THE BAG" Musk said, jokingly, "I'm going to let the cat out of the bag," saying, "This is the Model Y." "The desire to buy the car is very high, but people don't have enough money in their bank accounts to buy it. So the more affordable we can make the car, the better," Musk said.

Sources said Tesla managed to reduce costs on the Model Y by focusing on the battery pack and motor.

The company announced last week that it delivered 497,099 vehicles globally from July to September, a record three-month figure. While the end of the tax cut boosted sales, the impact could negatively impact electric vehicle demand in the coming months. Musk warned in July that Tesla could face "a few challenging quarters" after the US incentives expire.