Tesla Inc. plans to unveil a cheaper version of the Model Y on Tuesday, according to people familiar with the matter, following through on assurances it will have a more affordable vehicle to counter the loss of U.S. incentives for electric vehicles.

The new base Model Y is what Tesla started teasing in social media posts over the weekend, said the people, who asked not to be identified discussing private information. The cheaper vehicle will lack certain features and use less premium materials to offset the loss of the up to $7,500 federal tax credit that the U.S. stopped offering as of this month, the people said.

Tesla representatives didn’t respond to requests for comment. The company’s posts on X helped send its shares up 5.4% on Monday. The stock has risen 12% this year.

Tesla executives said during the company’s most recent earnings call that while production of a more affordable model started in June, they decided to put off ramping up output until after the U.S. phased out tax credits. Chief Financial Officer Vaibhav Taneja and Lars Moravy, Tesla’s vice president of vehicle engineering, were cryptic about what the car will be before Elon Musk let loose.

“It’s the Model Y,” Musk said, joking that he would “let the cat out of the bag.”

“The desire to buy the car is very high, it’s just people don’t have enough money in their bank account to buy it,” Musk continued. “So, the more affordable we can make the car, the better.”

Tesla managed to engineer cost out of the Model Y in part by focusing on the battery pack and motor, the people said.

The company announced last week that it delivered 497,099 vehicles worldwide from July through September, a record quarterly total. While the tax credit expiration boosted sales, the pull-forward effect could undermine EV demand in the months to come. Musk himself warned in July that Tesla could be in for “a few rough quarters” after U.S. incentives end.

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