Tesla Prices Model Y Standard Below $40,000, Introduces More Affordable Lineu

Tesla introduced lower-priced versions of its Model Y SUV and Model 3 sedan on Tuesday, making the Model Y Standard available at just under $40,000 and the Model 3 Standard at roughly $37,000, according to the company’s website. The automaker also rolled out an updated iteration of its Full Self-Driving (Supervised) driver-assistance package early Tuesday. Following the announcements, Tesla’s shares closed down 4.45%.

In the run-up to the reveal, Tesla released teaser clips over the weekend, including a short video that concluded with the date “10/7.” A second clip showed the silhouette of a vehicle’s headlights. Investor excitement pushed the stock up about 5% on Monday, but it fell roughly 3% on Tuesday as market focus shifted following the product disclosures and investor expectations for other potential product updates such as the long-promised next-generation Roadster.

The new entry-level Model Y omits several features available on higher trims, including a panoramic glass roof, leather seating and light bars, and is priced about $5,000 lower than the former entry version. The Model Y Standard is equipped with a battery that delivers an estimated 321 miles of range on a full charge, versus 357 miles for the Long Range rear-wheel-drive version.

Lower sticker prices may help offset the removal of the $7,500 federal EV tax credit under President Donald Trump’s spending bill, a factor that has tightened affordability for some buyers. Tesla continues to face intensifying competition globally and domestically from established automakers and new entrants, including Volkswagen and BYD, some of which are offering lower-priced alternatives.

Earlier this year, reports indicated Tesla had explored a further pared-down Model Y priced closer to $30,000, a plan that was discussed before recent tariff announcements and the tax credit changes. The company has not introduced a new production model since it began deliveries of the Cybertruck, its angular stainless-steel pickup, in late 2023. The Cybertruck, unveiled in 2019, never matched the commercial success of the Model 3 and Model Y and has been subject to at least eight voluntary recalls in the United States.

Tesla’s auto sales have been in a multi-quarter downturn, prompting management to emphasise the company’s longer-term potential in robotics and autonomous mobility. Consumer reactions to Elon Musk’s political positions and rhetoric have been cited as one factor in demand weakness, alongside an aging product lineup and rising competition. At an invitation-only event in mid-October last year, Tesla showcased a low two-seater Cybercab concept without steering wheels or pedals, which Musk suggested could retail for about $30,000; that vehicle was not in production as of the company’s second-quarter earnings call.

Promises of a next-generation Roadster stretch back to a 2017 event, and while Musk has at times described ambitious features — including in 2021 suggesting it could “fly” — the model has not reached production. Musk has also long suggested existing Tesla vehicles could be converted into robotaxis by software updates; however, Tesla’s Robotaxi testing continues to use human safety drivers, unlike rivals such as Alphabet’s Waymo and Baidu’s Apollo Go, which operate driverless services in some locations. In the field of humanoid robotics, Tesla’s Optimus project remains uncommercialised while other companies, including Agility Robotics and Unitree, are already selling bipedal robots.

Tesla’s share price has staged a recovery after a sharp first-quarter decline that erased about 36% of the company’s market value; the stock rose roughly 40% in the third quarter and stands about 12% higher year-to-date. The recent rally was accompanied by a large insider purchase: Elon Musk acquired approximately $1 billion of Tesla stock in mid-September.