On the Dash:
- Tesla launched cheaper Model 3 and Model Y versions under $40,000 to maintain competitiveness after the EV tax credit expired.
- The new models have reduced range and fewer features compared with premium versions, reflecting a cost-cutting strategy.
- Global sales are down 6% year-to-date, while CEO Elon Musk shifts focus to Optimus robots and self-driving robotaxi initiatives.
Tesla unveiled more affordable versions of its popular Model 3 sedan and Model Y SUV on Tuesday, with both priced under $40,000. The new pricing aims to keep Tesla competitive and maintain consumer demand even after the federal EV tax credit expires.
The standard Model 3 is priced at $36,990, while the Model Y is priced at $39,990, which is roughly 10% cheaper than its premium counterparts. These models offer less battery range and fewer features than the higher-end versions.
Tesla teased the release with a nine-second video on X on Sunday. Shares initially rose by 2% in premarket trading on Monday but fell 4.4% on Tuesday following the announcement.
The move aligns with Tesla’s growth strategy, first shared during its January earnings call, to introduce more affordable EV models. However, investors have expressed concern over CEO Elon Musk’s apparent shift in focus.
Tesla’s automotive segment, its primary revenue driver, has faced a global sales slowdown in 2025. While U.S. demand surged ahead of the federal tax credit expiration, the company’s global sales are down 6% year-to-date, with market share declining in Europe and China. Analysts expect U.S. EV demand to taper off without federal incentives.
Musk has increasingly focused on Tesla’s Optimus humanoid robot—which he believes will account for up to 80% of Tesla’s future value—and the rollout of the self-driving robotaxi service.
