The Tesla Model Y Owner's Manual is frustratingly silent on the media file types supported by the front USB port(s).
USB Connected Flash Drives
Connect a flash drive to a front USB connection (see
Interior Storage and Electronics on page 19). Touch
Media Player > USB, and then touch the name of the
folder that contains the song you want to play. After you
display the contents of a folder on the USB connected
flash drive, you can touch any song in the list to play it.
Or use the previous and next arrows in Miniplayer to
scroll through your songs.
NOTE: To play media from a USB connection, Model Y
recognizes flash drives only. You can play media from
other types of devices (such as an iPod) by connecting
the device using Bluetooth.
NOTE: Media Player supports USB flash drives with
FAT32 formatting (NTFS and exFAT are not currently
supported).
NOTE: Use a USB connection located at the front of the
center console. The USB connections at the rear of the
console are for charging only
(With regards to the Boombox function, the supported file types are .wav and .mp3. See Tesla Model Y Owner's Manual Page 203.)
My experience is that the front USB port(s) will accept a USB thumb drive formatted as FAT32, plays MP3 files.
See page 140:
https://www.tesla.com/sites/default/files/model_y_owners_manual_north_america_en.pdf