US: Tesla has introduced more affordable versions of its two best-selling electric vehicles, the Model Y sport utility vehicle and the Model 3 sedan.
The new Model Y will start at $39,990, while the refreshed Model 3 will begin at $36,990, Tesla announced on Tuesday. The move marks a significant step by Chief Executive Elon Musk to expand Tesla’s customer base after months of declining sales and intensifying competition, particularly from Chinese automakers.
Musk has long promised to deliver a truly mass-market electric vehicle. However, plans for a $25,000 model were shelved last year, according to Reuters reports. Despite that, Musk reaffirmed his commitment to making EVs more accessible.
Meet Model Y Standard & Model 3 Standard – our most affordable vehicles
Ultra-low cost of ownership, engineered for safety & comes with the best Tesla features you love
– 321 mi of range
– Extreme efficiency that takes you farther + saves you $$
– Minimal maintenance
– Can… pic.twitter.com/2cMQ5NW6Yf— Tesla (@Tesla) October 7, 2025
“The desire to buy the car is very high- it’s just that people don’t have enough money in the bank account to buy it. So the more affordable we can make the car, the better,” Musk added.
In the United States, Tesla’s prices effectively increased by $7,500 at the end of September after federal EV tax credits expired. The phaseout helped boost Tesla’s quarterly sales to record levels, but analysts expect a slowdown in the months ahead unless the new lower-priced models stimulate fresh demand.
Anticipation for the new models was stoked over the weekend, when Tesla released two brief teaser clips on X (formerly Twitter) showing the glow of headlights and a spinning wheel, ending with the date “10/7.”
Model Y Standard & Model 3 Standard are here pic.twitter.com/e2kXwAaQ0O
— Tesla (@Tesla) October 7, 2025
Tesla said production of the new vehicles would begin in the final quarter of 2025. Tesla has been struggling with a maturing product lineup and mounting competition from rivals in China and Europe.
Earlier this year, Tesla launched an upgraded Model Y featuring redesigned lighting and a rear-seat touchscreen, part of efforts to refresh its existing lineup while it develops next-generation products.
At the same time, Musk has been steering Tesla toward artificial intelligence initiatives, including robotaxis and humanoid robots, signaling a broader shift in the company’s long-term strategy. The rollout of affordable EVs is seen as critical to Tesla’s ambitious goal of delivering 20 million vehicles annually within the next decade.
Sources reveal that Tesla also plans to introduce a pared-down version of the Model 3 sedan in the coming months, further reinforcing its drive toward cost-conscious consumers.
