Source: Tesla

Tesla (NASDAQ:TSLA) introduced two new “standard” versions of its best-selling Model Y SUV and Model 3 sedan in the United States on October 7, with starting prices of $39,990 and $36,990, respectively.

The new models represent an average 10% price reduction compared with existing trims but remain above the $30,000 threshold that many investors and analysts had anticipated. Both cars are available for immediate order, with deliveries scheduled between December 2025 and January 2026.

The Model Y Standard and Model 3 Standard versions feature simplified designs and reduced equipment to lower costs. Tesla removed several premium elements, including panoramic glass roofs, power-folding mirrors, seat ventilation, and rear seat heating.

Both vehicles have cloth seats—with optional vegan leather for the Model 3—and smaller 18-inch wheels.

Source: Tesla

The cars have a shortened range of 321 miles (516 kilometers) with less powerful acceleration due to smaller batteries and single-motor rear-wheel-drive systems. The Model Y also loses its LED light bar, and both vehicles lack Tesla’s Autosteer driver-assistance feature.

According to Tesla’s Grünheide factory head André Thierig, the Model Y Standard has “a completely redesigned front, new bumpers, a redesigned rear, and different lights.” Series production is expected to begin in the coming weeks at the German plant.

Tesla’s decision follows the expiration of the U.S. government’s $7,500 electric vehicle tax credit at the end of September. The company is attempting to offset the loss of incentives and revive demand amid growing competition from automakers such as Hyundai (KRX:005380), General Motors (NYSE:GM), and Nissan (TYO:7201), which have recently lowered prices on models like the Ioniq 5, Chevrolet Equinox EV, and Nissan Leaf.

Wedbush analyst Dan Ives, a long-time Tesla bull, said the new versions are only about $5,000 cheaper than mid-tier trims, falling short of expectations. Shay Boloor, Chief Market Strategist at Futurum Equities, commented that the initiative is “a pricing lever and not much of a product catalyst.”

Shawn Campbell of Camelthorn Investments added that a sub-$30,000 model remains necessary for Tesla to compete with lower-cost Chinese automakers, while Michael Ashley Schulman, Chief Investment Officer at Running Point, noted that Tesla is “trying to play both Tesla and Toyota at once,” reflecting a shift from premium innovation to mass-market positioning.

Chief Executive Officer Elon Musk has long promised to produce a mass-market EV, but last year canceled plans for an all-new $25,000 model, opting instead to develop cheaper versions of existing vehicles.

Musk said during Tesla’s second-quarter earnings call in July that while consumer interest remains high, affordability is the primary barrier to growth. “The more affordable we can make the car, the better,” he said.

In the third quarter of 2025, Tesla produced 447,000 electric vehicles and delivered 497,000 units worldwide, marking a 7.4% year-over-year increase and setting a new quarterly record. In China, the Shanghai Gigafactory delivered more than 90,000 vehicles in September, contributing to a 31% quarter-over-quarter rise in local sales to 169,200 units.