That is a possibility, but a 2020 13.3" M1 MacBook Pro and a 2022 M2 13.3" MacBook that look exactly the same could cause customer confusion (even if Apple immediately ends sales of the 13.3" M1 MacBook Pro).
Spray some Blue, Green, Pink, Orange, or Red paint on it like the iMac 24". Same chassis , spray some non space-gray/silver paint on it , and drop the "Pro". Maybe slap a white bezel on it. Most folks won't get them confused at all. ( would get "yelled at" on fan forums but general market , cost concuious consumers. Does it work? yes. In my budget? yes .... buy . )
Tim Cook likes to keep old tech around at lower prices to entice price-conscious people, so I fully expect the M1 MacBook Air will stick around after the M2 refresh is launched by year-end - doubly so if the M2 MacBook Air sees a price increase (which I believe it will).
Has certainly done that in the iPad and iPhone space. Not so much in the Mac space. the volumes and diversity is different. Mac's have an higher upper half of the marketspace. Most of those are STILL ON Intel solutions 1.25 years into the transition.
Once the iPad Pro's and other two lower end Mac laptops dump the M1 there isn't much there in volume left to justify a M1. [ Apple appears not moving to toss it into a AppleTV or some other product line. ]
Apple has driven the average Mac selling price up with the M-series ; not down. Apple hasn't demonstrated any huge effort in looking for cheaper Macs. The other issue is that they don't look to be trying invoke fratricide between Macs and iPad Pros. ( Apple's 'answer' to affordable Chromebooks has been iPads ... not super discount Macs ( e.g. MBA 11.5" was dumped long ago and not really replaced. ) )
If Apple can sell all the M2 , M1 Pro/Max and up SoCs they can make , then that is the path their probably take. They aren't looking for a $600 priced, "windows killer'.
The iPhones are substantively different. The leading edge iPhones sells for a much higher average selling price than the mainstream cellphones on a percentage change basis. Apple's lower half laptops are more expensive but not more expensive than the mid-upscale laptops from other vendors in the Windows space. The MBA is about same price as a Dell XPS without the upscale options. Pile the upscale BTO to the XPS and the entry MBA is cheaper. The iPhone... phef. Samsung maybe the majority of cellphone market isn't trying to push those prices. The iPhone is substantially more on an island.
iPad ... pretty much the same. As mentioned above the $300 Chromebook is largely targeted by the $329 iPad. However, the Fire8 , Fire10 ... Apple isn't chasing those tablets in race to the bottom pricing.
The M1 has quirks. Quirks in the display support. It is off in ProRes support ( which even iPhones have to some coverage for). Pretty good chance it has other "Version 1" bugs in there. I don't see Apple wanting to hold onto to these for an extended period of time. M2 generation perhaps , but first gen is probably heading to retirement without much detours.