- Tesla unveiled cheaper versions of its popular Model Y and Model 3 electric vehicles.
- New Standard models are priced $5,000 to $5,500 less than Premium versions.
- Lower purchase prices also mean fewer features.
Electric vehicle giant Tesla has unveiled new, cheaper models of its Model Y crossover SUV and Model 3 sedan, two of the world’s best selling vehicles.
The Elon Musk-owned company just logged a record quarter of vehicle sales but it’s a benchmark that comes with an asterisk. A wave of EV enthusiasts made purchases ahead of a Sept. 30 sunsetting of federal tax credits worth $7,500 on new EVs and $4,000 on used vehicles. Before that surge, which drove up sales for all EV makers in the U.S. market in the last quarter, Tesla had been riding a downward trajectory.
China’s BYD surpassed Tesla in the first half of 2025 on a basis of global EV sales, the first time Tesla has been bested since it rose to dominance in the mid-2010s. Tesla barely edged out BYD in 2024 for the top spot, outselling the Chinese company by just 24,000 vehicles worldwide.
Tesla announced Tuesday that the new Model Y Standard will retail for $39,990, $5,000 less than the Model Y Premium. The Model 3 Standard is expected to sell for $36,990, a discount of $5,500 over the Model 3 Premium.
Model Y Standard: $39,990
Model Y Premium: $44,990
Price difference: $5,000 (-11.1%)
Model 3 Standard: $36,990
Model 3 Premium: $42,490
Price difference: $5,500 (-12.9%)
As is implied by the new designations, Standard models will come with fewer features than their Premium counterparts.
According to Tesla’s website, the Standard versions do not have the second-row touchscreen, feature only seven speakers instead of the 15 speakers and subwoofer that keeps the Premium models bumping and are available only with cloth interiors versus the more deluxe interior materials that come standard on the higher end models. Driving range and some performance metrics are also lower on Standard versus Premium models.
The company says the new Model Y Standard will be available in November or December with the Model 3 Standard ready for purchase in December or January 2026.
Tesla has long touted plans to bring cheaper EV models to market and the move may have been driven by the end of the federal EV tax credit program, nixed in President Donald Trump’s budget for fiscal year 2026 which began Oct. 1.
Public perception of Musk’s once close relationship with the president, and his actions as the former head of the Department of Government Efficiency, have soured some consumers on the Tesla brand while competition from both domestic and international electric vehicle makers has eaten into the company’s market lead.
Industry watchers also point to Tesla’s stale model offerings, and lack of interest in the company’s Cybertruck, as factors behind the brand’s fall from dominance.
A Tesla tide shift
Tesla’s stock value had an incredible ride in 2024, gaining over 80% over the course of the year, with most of that value ascension realized after Trump won reelection.
Industry watchers say that post-election bump was driven in large part by investor confidence that Musk’s massive financial support of Trump, with campaign contributions reportedly north of $270 million, and subsequent appointment to lead the newly created DOGE, would bode well for Tesla’s future performance as the CEO joined the president’s inner circle.
Some analysts point to Musk’s close personal association with the Tesla brand as a plus for those who view his actions outside the company as positive, but it’s also one that can have adverse consequences if those activities are viewed by potential customers in a negative light.
“Tesla has played a pivotal role in accelerating the adoption of electric vehicles, but our findings show that Elon Musk’s personal involvement in Tesla’s brand appears to be polarizing, pushing many buyers to look elsewhere,” said Ginny Buckley, chief executive of Electrifying.com, per a Newsweek report earlier this year.