They could have been but Elon turned the company's productive capacity away from the Toyota/Honda price point and expanded the product line to even more expensive cars like the Cybertruck. He himself said a decade ago that cheap Teslas were on the roadmap but instead he went at the luxury pickup market which (until next year's shipments) starts at around $80000.
The Model Y seemed like a smart last step before the pivot towards cheaper lower margin cars, given that crossovers are the best selling new cars in the country and they ended up being Tesla's best selling car, but he clearly had no interest in making cheaper cars once he saw their margins.
I'm not sure its even possible for him at this point. If he started development on a cheap Tesla today instead of five or six years ago, its probably too late when compared with how far ahead the foreign cheap EVs are and will be.