Tesla unveiled cheaper Standard versions of its Model 3 and Model Y electric vehicles on Tuesday, October 7, 2025, in a strategic move to counteract the recent expiration of federal tax credits and reinvigorate sales. The new models are priced several thousand dollars lower than previous base versions and feature reduced specifications to appeal to budget-conscious consumers amid growing market competition.
Tesla announced the Model 3 Standard and Model Y Standard on its website and through CEO Elon Musk’s social media platform, X, marking the company’s first major product release since the Cybertruck in 2019. The Model 3 Standard starts at approximately $35,000 to $39,000, while the Model Y Standard begins at around $38,000 to $42,000, with both models expected to be available for delivery in late 2025. The Model Y is slated for November or December, and the Model 3 for December or January, providing more affordable options for Tesla’s bestselling vehicles.
The Standard versions incorporate several cost-cutting measures compared to the Premium models, resulting in fewer features and lower performance. They lack the eight-inch second-row touchscreen, have only seven speakers instead of 15, and come with cloth interiors rather than microsuede. Additionally, they offer shorter driving ranges on a full charge, slower acceleration from 0 to 60 mph, and use passive shock absorbers instead of the frequency-dependent ones found in higher-end versions, making them a stripped-down alternative for price-sensitive buyers.
This announcement comes just a week after the $7,500 federal tax credit for electric vehicle purchases expired for most Tesla models in the United States, removing a key incentive that had previously made its cars more accessible. The credit’s expiration has increased the effective cost for American consumers, prompting Tesla to introduce these lower-priced options to maintain sales momentum and address affordability concerns that Musk has highlighted in recent statements.
Tesla’s move follows a period of volatile sales performance, with record global deliveries of 497,099 vehicles in the third quarter of 2025—driven largely by a rush to secure tax credits—but significant declines in the first two quarters of the year. The Model 3 and Model Y accounted for about 97% of these deliveries, underscoring their importance to Tesla’s revenue stream and the need for strategies to sustain demand in an increasingly competitive electric vehicle market.
The electric vehicle industry faces intensifying competition, particularly from Chinese automaker BYD, which is poised to overtake Tesla as the world’s largest EV seller. Other manufacturers, such as Hyundai, have also rolled out more affordable EV models, putting additional pressure on Tesla to adapt its pricing and product lineup. Tesla’s decision to use less premium materials in the Standard versions reflects a broader industry trend toward cost reduction to capture a wider consumer base.
Investors reacted cautiously to the unveiling, with Tesla’s stock falling about 4% shortly after the announcement, as markets had anticipated more aggressive price cuts to fully offset the tax credit loss. The modest reductions may not be sufficient to dramatically boost sales in a slowing EV market, raising questions about Tesla’s ability to navigate evolving consumer preferences and regulatory changes while maintaining profitability.
Looking ahead, Tesla is scheduled to report its third-quarter earnings on October 22, which will provide deeper insights into its financial health and the impact of recent sales trends. The company has been working on producing more affordable vehicles since earlier this year, and the success of these Standard models could be pivotal for its future growth, market share, and ability to fulfill Musk’s long-standing promise of making electric vehicles accessible to a broader audience.