Tesla has introduced new, more affordable versions of its Model Y SUV and Model 3 sedan, priced at $39,990 and $36,990 respectively. The move marks the automaker’s latest effort to reignite demand and recover market share as global competition in the electric vehicle (EV) sector intensifies.
The new models were officially announced on Tuesday, signaling a strategic push to attract price-sensitive buyers after months of declining sales.
A Long-Promised Affordable Tesla
CEO Elon Musk has long pledged to deliver a true mass-market electric car, though his much-hyped $25,000 model was canceled last year. Still, Musk reiterated his vision of making EVs more accessible, saying late last year that a future model would be priced below the key $30,000 threshold — once federal tax credits are factored in.
However, the expiration of the U.S. EV tax credit at the end of September effectively raised vehicle prices by $7,500, pushing many potential buyers out of reach. While that surge helped Tesla achieve record quarterly sales before the credit ended, analysts expect a slowdown through the rest of the year unless the new budget models can reignite demand.
“The desire to buy the car is very high — people just don’t have enough money in their bank accounts,” Musk said during Tesla’s second-quarter earnings call in July. “So the more affordable we can make the car, the better.”
Hype and Delays
Tesla stoked anticipation over the weekend by posting cryptic teaser clips on X (formerly Twitter), showing glowing headlights emerging from the dark and a spinning wheel ending with “10/7,” hinting at the October 7 reveal date.
Musk had initially promised production would begin by the end of June, but Tesla only completed what it called “first builds” of the cars. The company now expects customer availability sometime in the final quarter of the year.
Fighting Slowing Sales
The EV giant has been contending with softening demand for its aging lineup as rivals in China and Europe gain momentum. Analysts say Musk’s outspoken political views have also dented the brand’s reputation in some markets.
Earlier this year, Tesla introduced a refreshed Model Y with a new light bar and a rear touchscreen, aiming to breathe life into its best-selling SUV. Meanwhile, Musk continues to shift the company’s long-term focus toward artificial intelligence, robotaxis, and humanoid robots — even as short-term growth hinges on getting more affordable cars into production.
Analysts Skeptical About Pricing
According to Reuters, Tesla also plans to launch a stripped-down version of the Model 3 midsize sedan. These models are key to the company’s goal of delivering 20 million vehicles over the next decade — one of several milestones linked to Musk’s proposed $1 trillion compensation plan.
Still, not everyone on Wall Street is impressed.
“We believe the launch of a lower-cost model is the first step to getting back to a roughly 500,000-unit quarterly delivery rate,” said Dan Ives, analyst at Wedbush Securities, in a note shared with Al Jazeera. “But we’re relatively disappointed, as the price point is only $5,000 lower than previous Model 3 and Model Y versions.”
As of mid-afternoon trading in New York, Tesla’s stock was down nearly 4%, reflecting investor concern over whether modest price cuts will be enough to reignite growth in a crowded EV market.
