Tesla Releases Standard Versions of Model 3 and Model Y: Can the Price Unlock Demand?

In Focus

• Tesla unveiled Standard Versions of its Premium Model 3 and Model Y
• The vehicles are priced at $39,990 and $36,990 respectively
• Both vehicles are available for immediate order
• Investors, analysts concerned over the high pricing of the two vehicles

Tesla released standard versions of Model 3 and Model Y EVs during the October 7, 2025 event. However, the company priced the two vehicles at $39,990 and $36,990 respectively. According to Reuters, some people find these prices too high to attract new buyers to the EV brand.

Features of Tesla’s Standard Model 3 and Model Y

Tesla also unveiled a new version of its supervised Full Self-Driving driver assistance system as it sought to reposition itself in the EV market. Prior to the launch, Tesla shared teaser videos highlighting a spinning component and a vehicle with illuminated headlights against a dark background.

The videos created excitement over what the EV maker was about to unveil. Tesla stock soared 5% on October 6, 2025 as investors expected updates on new products like the next-generation Roadster.

The new Tesla standard versions come with the following:

• 321 miles or 516 km driving range
• Less powerful acceleration compared to Premium models
• Smaller battery size
• Manually adjusted side-view mirrors
• Textile seats
• Vegan leather for standard Model 3 Sedan

Tesla’s new standard vehicles do not come with:

• Autosteer feature
• Tesla’s driver assistance system
• Touchscreens
• Seat heating for rear passengers
• Standard Model Y SUV does not have an LED lightbar

Tesla’s new standard EVs are available for immediate order with deliveries expected to commence between December 2025 and January 2026 in the U.S.

Will Tesla’s Cheaper Model Y and Model 3 Boost Sales?

With the unveiling of the standard EVs, many wonder whether the company will be able to revitalize sales. In recent months, Tesla’s market share has reduced significantly due to an aging product line and stiff competition in China and Europe as Chinese EV makers price their products much lower.

In Europe, Tesla sales plunged in July 2025 despite an increase in new EV registrations. In the U.S, the company is struggling to adjust following expiry of the $7,500 federal EV tax credit. Some analysts suggest that Tesla’s affordable EV versions will do little to create demand.

“I just don’t know that this is enough. Longer term, this news doesn’t solve the problem posed by lower cost Chinese competitors in global markets. In my opinion, Tesla needs a sub-30k EV,” Camelthorn Investments Advisor, Shawn Campbell said.

The Shift in Tesla’s Plan for Affordable EVs

CEO Elon Musk has touted Tesla’s lower-cost EV as an opportunity for the company to widen its customer base. Last year, Musk said pricing an affordable Tesla below the $30,000 mark would be important for the company. For years, he promised to deliver mass-market vehicles.

In 2024, Musk discarded the plan to design an all-new EV priced at $25,000 and opted for lower-priced versions of current models. This shift raised concerns among investors and analysts who felt that the cheaper options would limit growth and reduce sales of existing EVs.

“It’s basically a pricing lever and not much of a product catalyst. I don’t see it as unlocking new demand at scale,” Chief Market Strategist at Futurum Equities, Shay Boloor said.

Early this year, Tesla announced the release of its revamped Model Y into the U.S. market Model Y has been Tesla’s highest-selling vehicle.

Tesla’s Standard Vehicle Launch at a Glance:

• Tesla unveiled a new version of its supervised FSD along with the standard vehicles
• CEO Musk had touted lower-cost EV as important to widening customer base
• Analysts feel a price below $40,000 would make the cars competitive in the U.S.
• Tesla will face headwinds competing in Europe with the current price

Why Pricing is Critical in Tesla’s Sales Strategy?

The loss of tax credits in the U.S. has triggered a silent EV pricing war. Some U.S. automakers have already reduced prices due to fears that demand for their vehicles could drop in the absence of tax credits.

Analysts and Tesla investors hold the view that lowering the cost of Tesla’s new standard models below the $40,000 mark could help increase sales in order to compete with models such as Kia EV 4, Equinox, and Ioniq 5.

Others expected Tesla to do more and price the new vehicles below $30,000. In Europe, the American EV maker will have a hard time competing against multiple electric and plug-in-hybrid models that are currently priced below $30,000. Tesla shares dropped 4.5% on October 7, 2025.