Tesla has unveiled new “affordable” versions of its popular Model Y SUV and Model 3 sedan, aiming to attract a broader audience. However, the starting prices — $39,990 for the Model Y and $36,990 for the Model 3 — have left some investors and analysts unimpressed, calling them too expensive to spark real demand.
CEO Elon Musk described the move as a step toward making electric cars more accessible. Yet, critics argue that the prices still fall short of his previous promise to create a Tesla under $30,000. The announcement comes as the company faces stiff competition from rivals in Europe and China and declining U.S. sales following the end of the $7,500 federal tax credit for electric vehicles.
The new Tesla models have shed some luxury features to keep costs down. They no longer include premium finishes, heated rear seats, or Autosteer, the company’s driver-assist system. Both vehicles still offer an impressive 321-mile (516 km) driving range but have smaller batteries and slower acceleration compared to the premium trims.
Analyst Dan Ives from Wedbush noted that the cars are only about $5,000 cheaper than Tesla’s next-level trims, calling it “a limited pricing lever rather than a true demand catalyst.” Similarly, market strategist Shay Boloor of Futurum Equities said the price reduction was unlikely to create significant new demand.
Despite skepticism, Tesla hopes that dropping below the $40,000 mark will make its EVs more competitive against upcoming models from Chevrolet, Hyundai, and Kia. In Europe, however, Tesla will have to compete with more than a dozen electric and hybrid cars priced under $30,000, while Musk’s political controversies may further challenge the brand’s image.
Deliveries for the new Model Y and Model 3 are expected between December 2025 and January 2026. Musk remains optimistic, saying affordability is key to Tesla’s future. “The desire to buy is very high,” he said earlier this year. “People just don’t have enough money in the bank.”
Market analysts describe this shift as Tesla’s effort to balance innovation with affordability — “swapping its Steve Jobs turtleneck for a Walmart hoodie,” as one investor put it — a sign that the electric car pioneer is evolving to survive in a fiercely competitive market.
In other news also read about Tesla Sales Hit Record in Third Quarter Before US Tax Credit Expired
