Tesla unveils cheaper standard versions of Model 3 and Model Y
Tesla announced more affordable standard variants of its Model 3 sedan and Model Y SUV on October 7, 2025, aiming to counter the recent expiration of a federal EV tax credit. The new models start at $36,990 for the Model 3 and $39,990 for the Model Y, but feature reduced specifications compared to premium versions. Availability begins in November for the Model Y and December for the Model 3.
The announcement came via Tesla's website and social media platform X, following teaser videos posted over the weekend showing headlights and a spinning wheel with the date '10/7'. These stripped-down models address slowing sales amid increased competition and the end of the $7,500 U.S. federal EV tax credit on September 30, 2025, which had boosted third-quarter deliveries to a record 497,099 vehicles, mostly Model 3 and Y units.
The Model 3 Standard, priced at $36,990 before fees (or $38,630 including destination and order fees), offers 321 miles of EPA-estimated range, rear-wheel drive, and a 0-60 mph time of 5.8 seconds. It lacks features like the rear touchscreen, ambient lighting, 15-speaker audio system (replaced by seven speakers without subwoofer), ventilated seats, and Autosteer lane-centering, though basic Traffic-Aware Cruise Control remains. The cloth interior replaces microsuede, and adjustments for the steering wheel and mirrors are manual. Supercharging adds 170 miles in 15 minutes, slower than premium models.
Similarly, the Model Y Standard starts at $39,990 ($41,630 with fees), with the same 321-mile range and 6.8-second 0-60 time. It features a metal roof instead of panoramic glass, no front or rear light bars, fabric seats, and no FM/AM radio tuner—relying on streaming via cellular data or Bluetooth. Passive shock absorbers replace frequency-dependent ones, and it omits the second-row screen.
CEO Elon Musk had promised affordable EVs for years, including a canceled $25,000 model, shifting focus to AI and robotaxis. 'The desire to buy the car is very high. [It is just that] people don’t have enough money in the bank account to buy it,' Musk said in July. However, effective prices rose post-tax credit; the new models cost $2,000-$2,500 more than premium versions did with the incentive.
Analyst reactions were mixed. Wedbush's Dan Ives noted, 'We are relatively disappointed with this launch as the price point is only $5k lower than prior Model 3s and Ys,' though he saw it as a step toward 500,000 quarterly deliveries. Morningstar's Seth Goldstein viewed it positively for broadening access below $40,000. Tesla shares fell 4.5% to $443.09, reflecting investor hopes for deeper cuts amid rivals like Hyundai's cheaper EVs and upcoming Nissan Leaf and Chevy Equinox.