Tesla has unveiled more affordable versions of two of its popular electric vehicles in an effort to boost sales during a challenging year. The new Model Y now starts just under $40,000 with a simplified interior, while the updated Model 3 is priced below $37,000 – dropping to under $35,000 for New York buyers using state rebates.
Despite the news, Tesla stock fell 4.5% to $443.09, as investors remain cautious. Analysts suggest these updated models may not be enough to drive a significant increase in sales, since buyers were expecting entirely new vehicles rather than updated versions of older ones.
To achieve the lower price, the new Model Y comes with fewer features. It has a 321-mile range, fewer audio speakers, a fabric interior instead of microsuede, no panoramic glass roof, and no second-row touchscreen. The updated Model 3 also offers a shorter range, reduced ambient lighting, and fewer premium features.
These budget-friendly models enter a competitive market, where EVs around $40,000 include Ford’s Mustang Mach-E, Chevrolet’s Equinox EV, and Hyundai’s Ioniq 5. The recent expiration of the $7,500 federal EV tax credit may also lead some buyers to delay their purchases.
Tesla has long aimed to attract cost-conscious buyers, but these new “standard” versions remain above the previously discussed $25, 000 target. The company hopes these updates will appeal to new customers and maintain its market presence despite increased competition and recent public criticism of CEO Elon Musk.
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