Tesla has introduced “affordable” versions of its popular Model Y SUV and Model 3 sedan, with starting prices at $39,990 and $36,990. However, these prices have raised concerns among analysts and potential buyers, who find them still relatively high.
Tesla’s Price Adjustments and Market Reactions
Following the announcement, Tesla’s stock experienced a 4% drop. Analyst Dan Ives from Wedbush expressed disappointment, noting that the new models are only $5,000 cheaper than their premium counterparts. Furthermore, these new versions, termed Standard, are actually priced higher than previous models when accounting for the recently expired $7,500 tax credit.
Strategic Shift amid Competition
Elon Musk, Tesla’s CEO, has long aimed to produce mass-market vehicles. In light of recent challenges, such as declining sales and increasing competition, the company opted to create lower-cost variants of existing models instead of launching an entirely new electric vehicle priced under $30,000.
This decision has sparked concerns about the potential impact on sales of its current models. Shay Boloor, chief market strategist at Futurum Equities, argued that these changes are more about adjusting pricing than generating significant new demand.
Specifications of the New Models
- Both models offer a range of 321 miles.
- Acceleration is less powerful compared to premium trims.
- Standard versions do not include Autosteer or rear passenger touchscreens.
- Cost-cutting features include textile seats, manually adjusted side-view mirrors, and the removal of the LED lightbar in the Model Y.
Deliveries for these standard versions are slated to commence between December 2025 and January 2026, though they can be ordered immediately.
Future Plans and Market Outlook
Earlier this year, Tesla recorded a surge in quarterly sales, driven partly by customers purchasing vehicles before the tax credit expiration. However, sales are expected to decline moving forward unless new, more affordable options can stimulate consumer interest.
Musk acknowledged the high demand but emphasized financial constraints among buyers. He reiterated that making cars more affordable is a key objective.
Upcoming Developments
While Tesla has shared teasers about these vehicles, including snippets on social media, expectations for production and availability remain tentative. Musk previously indicated that production would begin by June, but only initial builds were completed as of July.
Furthermore, Tesla’s plans for the future include a focus on artificial intelligence and the development of robotaxis, with a goal of delivering 20 million vehicles over the next decade. Affordable cars will be crucial to achieving this milestone and ensuring continued growth, especially in a competitive landscape.
