Tesla has unveiled lower-cost versions of its Model Y SUV and Model 3 sedan to boost sales after the expiry of the United States’ electric vehicle tax credit, though its share price fell by 4.5% as investors were underwhelmed.
The new Model Y Standard and Model 3 Standard are priced at around US$39,990 and $36,990, just $5,000 less than the existing versions. Tesla CEO Elon Musk had said last year that the company would release vehicles priced below $30,000.
“Meet Model Y Standard & Model 3 Standard – our most affordable vehicles,” Tesla wrote. “Ultra-low cost of ownership, engineered for safety & comes with the best Tesla features you love.”
The Standard versions of these vehicles include a range of 517 kilometres, below the typical Model Y’s range of 600 kilometres and the Model 3’s range of 750 kilometres. These cars also feature seven speakers instead of 15, and do not have automatic steering or a backseat touchscreen.
Tesla’s Standard models will be available in the United States in December or January, and are not currently expected to be released in Australia.
The company reportedly cancelled plans to launch an all-new vehicle priced at about $25,000 last year. Musk had also said in 2024 that pricing Tesla’s vehicles below $30,000 after incentives would attract new buyers.
The U.S.’ $7,500 tax credit for electric vehicle purchases expired at the end of September. Vehicle sales in the country are likely to reach a new record this year, Cox Automotive projects, with consumers rushing to buy ahead of the subsidy’s expiry and tariff-related price hikes.
While Tesla’s deliveries surged past estimates last quarter before the tax credit ended, deliveries in the year’s first two quarters dropped amid growing competition in the EV sector and dissatisfaction with Musk’s right-wing political activism.
Deliveries are down 6% year-over-year across 2025’s first three quarters.
The company’s share price has recovered from its slump in March and April after news of a potential major pay package for Musk, and is now up 14.2% year-to-date.
Tesla’s (NASDAQ: TSLA) shares closed at $433.09, falling from their previous close at $453.25. Its market capitalisation is $1.36 trillion.
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