Tesla recently launched the “affordable version” of its Model Y SUV and Model 3 electric sedan in an attempt to boost sales. However, market observers believe that the price reduction this time is not significant, and the impact may be limited.
The new affordable version of the Model Y SUV starts at $39,990, while the Model 3 electric sedan starts at $36,990. Both models are currently popular choices among Tesla vehicles.
To reduce costs, these models have made simplifications in some high-end features, such as removing LED light strips, the Autosteer system, rear seat heating, among others. Both models come with manually adjustable rearview mirrors and cloth seats, with the Model 3 offering the option of eco-friendly leather seats.
The range of the vehicles remains above 300 miles (approximately 480 kilometers). The acceleration performance is slightly lower than the current premium models. Both models use smaller-sized batteries.
Pre-orders for both models are now open, with delivery expected between December 2025 and January 2026.
CEO Elon Musk stated last year that the new affordable vehicles are aimed at attracting a larger consumer base, emphasizing that a low price is key to tapping into a wider potential market. Musk has been promising to introduce electric cars for the mass market for years, and last year he changed plans from launching a new $25,000 vehicle to introducing a low-priced version of existing models.
However, some analysts and investors point out that prices of $39,990 and $36,990 are still relatively high for the mass market. This pricing strategy may not significantly boost sales and may even compete with existing models, limiting the company’s growth potential.
Wedbush analyst Dan Ives expressed disappointment that the new vehicles are only about $5,000 cheaper than the high-spec versions of each model. The prices of the new affordable cars are not only higher than the cheapest model in the U.S. in September, but buyers at that time still enjoyed tax credits provided by the U.S. government.
Futurum Equities chief market strategist Shay Boloor stated: “This is essentially a pricing move, not a true product catalyst. I don’t believe it can drive significant new demand.”
Tesla’s stock price fell by 4.5% on Tuesday, October 7.
Tesla is facing sales declines amid increasing competition in electric vehicles from Europe and China, along with the triple pressure of the U.S. canceling the $7,500 purchase tax credit.
After the U.S. government canceled the electric vehicle purchase tax credit on September 30, many U.S. automakers are concerned about a decline in demand and have already reduced prices ahead of time. Tesla is not the first to reduce prices.
Analysts point out that while the prices of Tesla’s affordable models may be high for the general market, they do have a certain appeal to buyers considering an electric vehicle and could contribute to competition with the Chevrolet Equinox, Hyundai Ioniq5, and Kia EV4 next year.
However, some anticipate that Tesla may need to significantly lower prices to below $30,000.
Shawn Campbell, advisor at Camelthorn Investments, stated: “I just don’t think it’s enough. In the long term, this news cannot address the issue of low-priced Chinese competitors in the global market. In my view, Tesla still needs an electric vehicle priced below $30,000.”
Furthermore, Musk’s conservative political stance has weakened brand loyalty to Tesla in the European market. The new Tesla models will compete with over a dozen electric and plug-in hybrid vehicles priced below $30,000.
(This article references reports from The Wall Street Journal and Reuters)