Tesla has unveiled slightly cheaper “standard” versions of the Model 3 and Model Y

Tesla has spent more than a year promoting the arrival of “more affordable models” of its cars on the way, and on Tuesday, the company finally revealed them. The company now sells a more basic version of the Model 3 sedan and Model Y SUV, which start at $36,990 and $39,990, respectively.

The new versions, each called “standard,” get an estimated range of 321 miles on a full battery, and will come with fewer features than the more premium rear- or all-wheel-drive variants when they ship later this year. They don’t even have Autopilot, the company’s primary advanced driver assistance system. (New models come only with traffic-aware cruise control; autosteering, which completes the Autopilot feature set, is missing.)

The release of cheaper models should help push Tesla to grow again after it saw sales decline in 2024. But prices aren’t as low as some had hoped, especially considering CEO Elon Musk once floated the idea of ​​a $25,000 Tesla car — before that. This project was eventually killed.

The new Model 3 doesn’t even fall below the $35,000 price threshold that Tesla promoted in the run-up to the car’s launch in 2016. That sticker price, which helped put Tesla on the map, was never offered except for a few months as an off-menu ordering option.

New cars are different inside and out. While Tesla cars are known for being minimalist, the Model 3 and Model Y Standard take the spartan approach to the extreme. There is no touchscreen for the second row. The steering wheel and side mirrors are adjusted manually. There’s no FM/AM radio and only seven speakers compared to 15 speakers and one subwoofer in the more expensive versions. Only the first row has heated seats.

On the outside, Tesla has ditched the light bar that adorns the front of the more expensive Model Y. The glass roof on standard cars has also disappeared.

Musk and other Tesla executives did just that Jokingly In the past, at length, he’s been about playing “Game of Thrones but for pennies” — an attempt to describe the company’s mad scramble to remove as much cost from its cars as possible. This abstract thinking seems to be the core strategy for how the company approaches the Model 3 and Model Y Standard.

Tesla plans to sell these versions in multiple global markets, including Europe. The expiration of the US federal tax credit on electric vehicles last month means those prices will be very pronounced in the US, unless buyers live somewhere with strong government EV incentives.

This sets up an interesting calculation for buyers of new electric vehicles. Major automakers are simultaneously withdrawing plans for a number of more expensive electric cars, theoretically reducing competition, which could be a boon for Tesla.

Ford is working on a low-cost electric vehicle platform scheduled to launch in 2027. General Motors will bring back the Chevy Bolt. Emerging automakers like Rivian and Lucid Motors, and even new entrants like Slate Auto, are looking to launch electric vehicles in the next few years that are priced on either side of the Model 3 and Model Y Standard.

Musk did measurable damage to the Tesla brand earlier this year when he participated in the second Trump administration. Tesla rebounded to have its best quarter ever as the EV tax credit expires, and it’s unclear how long that momentum will last. The new standard models will likely put competitive pressure on Tesla’s own offerings, not to mention the potential devastation they could wreak on the used market.