Tesla Model Y and Model 3 Get ‘Affordable’ Versions But Prices Spark Debate

Tesla has unveiled new “affordable” versions of its popular Model Y SUV and Model 3 sedan, but the starting prices of $39,990 and $36,990 are raising questions about whether the vehicles are truly accessible to a broader market. The announcement came on October 7, 2025, as the company works to revive slowing sales and fend off growing competition in the global electric vehicle (EV) market.

CEO Elon Musk has long promised an entry-level Tesla that would break the $30,000 barrier. However, this latest move still keeps the brand firmly in the mid-premium segment, leaving many analysts unconvinced that it will attract a new wave of cost-sensitive buyers.

New Standard Models Cut Features but Keep Long Range

The new Standard versions of the Tesla Model Y and Model 3 maintain an impressive driving range of around 321 miles (516 km) but make several cost-cutting changes. Tesla has removed premium touches like rear heated seats, the LED lightbar in the Model Y, and Autosteer driver assistance. Buyers will also find smaller batteries, manually adjusted mirrors, and textile seats, with vegan leather available as an upgrade for the Model 3.

Deliveries are expected to begin between December 2025 and January 2026 in many markets. Tesla confirmed the trims can already be ordered online, signaling a push to keep end-of-year sales active after the U.S. federal EV tax credit expired on September 30.

Despite the lower price tags, the cuts amount to roughly $5,000 compared with existing trims — a figure analysts say may not be enough. Dan Ives of Wedbush said he was “disappointed” the price drop was so limited, while other experts noted that losing the $7,500 U.S. tax credit now makes the vehicles effectively more expensive for many buyers compared to September.

Industry Reaction: Pricing Seen as Missed Opportunity

Market strategists argue the move may help Tesla maintain sales momentum but won’t fully open the door to mass-market adoption. Shay Boloor of Futurum Equities called the trims “a pricing lever and not much of a product catalyst,” suggesting Tesla is tweaking existing models rather than sparking real demand growth. Investors also fear that the cheaper trims could cannibalize sales of higher-end models, reducing Tesla’s margins without expanding its customer base.

Shawn Campbell of Camelthorn Investments said the brand still needs a sub-$30,000 EV to compete with lower-cost Chinese automakers and affordable models like the Chevrolet Equinox EV and Hyundai Ioniq 5. In Europe, where Musk’s political views have already affected brand loyalty, Tesla faces dozens of electric and hybrid models priced below $30,000.

Meanwhile, Musk continues to pivot Tesla’s long-term strategy toward artificial intelligence, robotaxis, and humanoid robots. But for now, the company needs vehicles that can drive near-term revenue growth. Michael Ashley Schulman, CIO of Running Point, likened the move to Tesla “dropping its Steve Jobs turtleneck and slipping into a Walmart hoodie.”

The launch of the lower-priced Tesla Model Y and Model 3 shows an attempt to reach more buyers, but experts remain skeptical. Without breaking the $30,000 barrier, Tesla may struggle to capture cost-conscious drivers and fend off intense global competition.

FYI (keeping you in the loop)-

Q1: How much does the new Tesla Model Y cost?

The new Standard Tesla Model Y starts at $39,990 in the U.S.

Q2: What is the range of the new Tesla Model Y and Model 3?

Both Standard versions offer about 321 miles (516 km) on a full charge.

Q3: When will deliveries of the new Tesla trims begin?

Deliveries are expected between December 2025 and January 2026.

Q4: Why do analysts say the new Teslas are still expensive?

Analysts say prices are only about $5,000 lower than existing trims and the loss of the $7,500 tax credit makes them less attractive.

Q5: Is Tesla planning a cheaper car under $30,000?

Elon Musk canceled a $25,000 EV plan last year, instead opting to release cheaper versions of current models.