Tesla debuts ‘affordable’ Model Y and 3 in us that beat some expensive | US News
Tesla has rolled out “affordable” versions of its best-selling Model Y Suv and Modan 3 sedan, but the starting prices of $39,990 and $36,990 were too high, some said, to attract a new class of buyers to the electric vehicle brand.
CEO Elon Musk has promoted the car as a way to tap a broader group of buyers, saying last year that a price of less than $30,000, after incentives, was key.
Tesla is trying to reverse declining sales of its aging lineup amid growing competition in Europe and China, and the loss of the $7,500 U.S. tax credit. The new cars drop some of the premium finishes and features but offer driving ranges above 300 miles (480 km).
Tesla stock closed up 4.5%, and Thulan Dan Ives, an analyst at Wedbush, said he was disappointed that the cars were only about $5,000 cheaper than next-level trim levels of models.
The new standard versions cost more than the cheapest US models in September, when the now-voiced tax credit was included.
Musk has for years promised mass-market vehicles, though last year he scrapped plans for a brand-new $25,000 vehicle, Reuters first reported. Instead, it chose to build lower-priced versions based on Tesla’s existing models, raising concerns among investors and analysts that cheaper cars would cannibalize existing vehicle sales and limit growth.
“It’s basically a pricing lever rather than a product catalyst,” said Shay Bollore, chief market strategist at Futurum Equities. “I don’t see it opening up new demand on a large scale.”
Fearing a decline in demand after the loss of tax credits, some US automakers have already cut prices while others have discovered mechanisms to effectively extend the benefit of the incentives.
Investors and analysts said dropping the price below $40,000 will help drive sales as the latest offerings compete next year with Chevrolet’s Exinox, Hyundai’s Ioniq 5 and Kia’s EV4. Some, though, expected a bigger tilt from Tesla to under $30,000.
“I don’t know that’s enough,” said Sean Campbell, an advisor at Camelthorn Investments. “In the long term, this news does not solve the problem that low-end Chinese competitors pose in global markets. In my opinion, Tesla needs a Sub-30K EV.”
In Europe, where Musk’s far-right political views have undermined brand loyalty, the new entries will go up against more than a dozen electric and plug-in hybrid models with price tags under $30,000.
Sales in the September quarter rose to a record high as consumers rushed to take advantage of the EV tax credit before it expires on September 30, but expectations will slow for the rest of the year, unless an affordable vehicle comes to the rescue.
“The desire to buy the car is very high. [It’s] only [that] People don’t have enough money in the bank account to buy it, Musk said in July during Tesla’s second-quarter earnings call. So the sooner we can make the car, the better.”
Both standard versions offer 321 miles (516 km) of range and less aggressive acceleration than the current top trims, called Premium. Tesla has reduced the battery size on both cars, according to its website and some influencers who got a preview.
Both cars can be ordered immediately, with deliveries set to take place between December 2025 and January 2026 for many locations, Tesla’s website showed.
Standard versions do not come with Autosteer, Tesla’s driver assistance system, touchscreens and seat heaters for rear passengers. Tesla has also removed the LED headlight bar on the cheaper Model Y. Both come with manually adjusted side-view mirrors and fabric seats, with vegan leather available for the Model 3.
Musk has been torching the company toward artificial intelligence, focusing on robotics and humanoid robots, but new cars are key to near-term revenue growth.
“For the market, this is Tesla dropping it in a Steve Jobs Turtleneck and slipping into a Walmart hoodie,” said Michael Ashley Shulman, chief investment officer at Running Point. “It’s no longer the cool rebel on the edge of innovation — it’s the establishment trying to play both Tesla and Toyota simultaneously.”