Tesla has unveiled new “affordable” versions of its best-selling Model Y SUV and Model 3 sedan, with starting prices of $39,990 and $36,990 respectively.
The starting price of Model Y Standard is $39,990. The price of Premium Model Y (rear-wheel drive) is $44,990. The price of Premium Model Y (all wheel drive) is $48,990. The price of Performance Model Y (all wheel drive) is $57,490.
Despite the price cut, analysts and investors say the move may not be enough to attract new buyers or significantly boost sales in the competitive electric vehicle (EV) market. Tesla delivered 481,166 Model 3/Y vehicles in Q3 2025.
CEO Elon Musk has long promised to deliver a mass-market EV, saying last year that a price point below $30,000 — after United States government incentives — would unlock the next wave of demand. The new Standard versions of Tesla’s electric cars are about $5,000 cheaper than the previous models and still cost more than the cheapest models available in September when the now-expired $7,500 U.S. EV tax credit was factored in.
The new models cut some premium features, including Tesla’s Autosteer driver-assistance, rear seat heating, and LED light bars, while still offering an impressive range of 321 miles (516 km). Both vehicles can be ordered immediately, with deliveries expected between December 2025 and January 2026.
Tesla’s latest pricing strategy comes as the company faces slowing global sales, rising competition from Chinese EV makers, and the loss of key subsidies in the U.S. and Europe.
Tesla’s stock closed down 4.5 percent following the announcement, as some investors expressed disappointment that Musk opted for incremental price cuts instead of a new sub-$30,000 model.
In Europe, Tesla will face stiff competition from more than a dozen electric and plug-in hybrid models priced below $30,000, as well as waning brand loyalty linked to Musk’s controversial political stances.
Tesla’s latest “affordable” Model Y and Model 3 variants have entered a competitive EV market where pricing and performance are increasingly crucial. The Model Y Standard Rear-Wheel Drive, starting at $39,990, and the Model 3 Standard Rear-Wheel Drive, priced at $36,990, aim to attract new buyers with solid range and efficiency. Both offer 321 miles of driving range and can add up to 160–170 miles in just 15 minutes of fast charging. Despite this, analysts believe Tesla’s new pricing is still too high to significantly boost demand.
Reuters has released the latest data comparing Tesla’s new models with rival electric vehicles.
Volkswagen ID.4 2025 Pro starts at $45,095 with a range of 291 miles and faster acceleration at 0–60 mph in 4.9 seconds.
Hyundai Ioniq 5 is priced at $42,600, offering a 318-mile range and one of the quickest charging times—10 percent to 80 percent in just 20 minutes.
Kia EV4, expected to start around $35,000, could offer up to 391 miles of range (WLTP), outpacing Tesla’s new cars on efficiency while maintaining comparable charging performance.
Chevrolet’s Equinox EV 2025 undercuts Tesla at $33,600, offering around 319 miles of range and advanced driver-assist features like lane assist and collision alerts.
While Tesla’s new Standard variants provide strong performance, including acceleration from 0–60 mph in 5.8 to 6.8 seconds, the decision to remove premium features such as Autosteer, LED lightbars, and heated rear seats could reduce their appeal. Both cars retain Tesla’s traffic-aware cruise control, but rivals like Kia and Hyundai offer broader advanced driving assistance in higher trims.
Industry analysts note that the competition in the sub-$40,000 EV segment is intensifying, with legacy automakers and Asian brands targeting cost-conscious buyers. Although Tesla’s reputation for range and charging speed remains strong, experts say real growth will require a sub-$30,000 electric vehicle, a milestone Elon Musk once hinted at but has yet to deliver.
Baburajan Kizhakedath