Tesla
- Tesla launched budget versions of its Model Y and 3 EVs on Tuesday.
- The ‘Standard’ variants cost around $5,000 less but come without a host of features.
- They’re also more expensive than the cheapest Tesla you could buy as recently as last week.
Tesla’s “most affordable” EVs are finally here — but how cheap are they really?
The electric carmaker’s shares fell on Tuesday after the launch of new stripped-back versions of Tesla’s best-selling Model Y and 3.
The new Model Y and Model 3 Standard cost $39,990 and $36,990, around $5,000 less than Tesla’s flagship models, but come without Autosteer, rear screens, leather seats, and radios.
Despite this, the new variants will cost you around $2,000 more than the classic Model 3 and Y would have done before the expiry of the $7,500 federal tax credit for a new electric car, which ended on September 30.
Wannabe Tesla owners can still access EV subsidies in states like New York and Colorado, but many customers now face the prospect of paying more than they would have just over a week ago for a car with fewer features.
The Model Y and 3 Standard are also more expensive than the cheapest EVs on the market. The Nissan Leaf starts at $29,990 in the US, while Tesla’s Detroit rival General Motors sells the electric Chevy Equinox from $35,100.
Tesla’s affordable models are also a long way from the $25,000 price tag that has often been held up as a benchmark for electric vehicle adoption.
Jeff Bezos-backed EV startup Slate is targeting a price point in the mid-$20,000s with its buzzy electric truck, while GM and Ford have both said they will ship electric cars that cost $30,000 or less in the coming years.
Elon Musk floated the idea of a $25,000 Tesla as early as 2020, saying the vehicle had “always been our dream.” But the company has backed away from plans to build a radically low-cost vehicle in recent years.
Last April, Reuters reported that Tesla had scrapped a proposed affordable model, code-named NV91. In October 2024, Musk told investors that the rise of autonomous vehicles meant it would be “pointless” for the company to build a non-robotaxi $25,000 car.
The Model Y and 3 Standard, which Tesla first teased in April 2024, are built on the automaker’s existing production lines.
Tesla reported record quarterly sales last week, but the EV giant still faces an uphill struggle to beat last year’s total as it battles fierce competition from upstart Chinese automakers, which are expanding around the globe.
Many of these companies, which have avoided the US market due to high tariffs, offer electric vehicles that are cheaper than Tesla’s Standard models.
The Xiaomi YU7, a Model Y competitor and monster sales hit, starts at 253,500 yuan ($35,600) in China, while BYD offers its Seagull hatchback for as little as $25,000 in some European markets.
For Tesla fans disappointed by the price tags on the new models, there is another way of getting a $25,000 Tesla.
Used Tesla prices have plummeted over the past year, with the average cost of a pre-owned Model 3 falling to just over $25,000 in July, per data from iSeeCars.
Tesla did not respond to a request for comment, sent outside normal working hours.
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