Tesla Launches Sub-$40K Model 3 & Model Y to Boost EV Sales

Tesla has taken a bold step to make electric vehicles more accessible, unveiling stripped-down versions of its Model 3 sedan and Model Y SUV on October 7. Priced under $40,000, these “Standard” trims are designed to attract buyers affected by the expiration of the $7,500 federal tax credit.

The new Model Y Standard starts at $39,990, $5,000 below the current Long Range trim, while the Model 3 Standard is priced at $36,990. Both promise 321 miles of EPA-estimated range, although acceleration has been adjusted: 0-60 mph in 6.5 seconds for the Model Y and 5.8 seconds for the Model 3.

To reach these prices, Tesla made several changes: leather seats are replaced with cloth, panoramic glass roofs and rear touchscreens removed, wheels downsized to 18 inches, and premium audio simplified. Despite these trade-offs, both models retain Full Self-Driving compatibility.

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Orders opened immediately on Tesla’s website, with deliveries expected between December 2025 and January 2026 in the US, China, and Europe. Production will ramp up at Gigafactory Texas and Shanghai, utilizing existing lines to avoid high costs.

This launch comes at a critical time. Tesla’s global sales fell 5% in 2025, challenged by affordable EVs from competitors like BYD and Chevy. Analysts argue that pricing closer to $30,000 may be necessary to capture mainstream buyers, yet early reservations for the new trims surged past 50,000.

Environmental advocates highlight the potential impact: widespread adoption of these models could reduce CO2 emissions by over a million tonnes annually. On social media, memes and discussions about “budget Teslas” have proliferated, reflecting both excitement and scrutiny.

Tesla’s move signals a strategic pivot: making EVs more affordable without compromising key features, aiming to expand its market share and influence in a rapidly evolving automotive landscape.