For nearly two decades, CEO Elon Musk has promised Tesla would make a more affordable electric vehicle, to, as he put it in 2006, “help expedite the move from a mine-and-burn hydrocarbon economy towards a solar electric economy.” Is it finally here? Kinda, sorta.
On Tuesday, Tesla announced a new Model Y and Model 3 Standard, versions of its popular compact SUV and sedan stripped of a few higher-end touches and features to bring the price down to $39,990 and $36,990, respectively. They’re both about $5,000 cheaper than the Premium variants, which goes a ways—but not all the way—toward recouping the $7,500 tax credit canceled by the GOP-led Congress this past summer.
The price point also puts Tesla’s newest models firmly in the “more affordable” EV camp. The average transaction price for electric vehicles last month was over $57,000, according to Kelley Blue Book.
But the new variants, which look a lot like older versions of the Model Y and S, might not be enough to turn new customers to the electric side. “The market has been clamoring for a cheaper electric vehicle,” says Joseph Yoon, a consumer analyst at Edmunds. An electric closer to $30,000 might turn some once EV-skeptical drivers’ heads, he says. That’s especially true in this new auto-tariff world, where the price of any new car, no matter how it’s fueled, is expected to tick up by thousands of dollars.
Yoon is doubtful that a 10 percent price cut will prove a big winner for Tesla. “Instead of iterating and improving their products more meaningfully, what [Tesla] has decided to do is almost undercut themselves a little bit,” says Yoon. For years, the electric automaker set the pace for the rest of the sector. This new variant “feels like a classic legacy automaker move,” he says.
To shave a few thousand off the cost of the Model Y and 3, Tesla made some nips and tucks—decontenting, in auto speak.
