Today, Tesla announced a new variant of the Model Y crossover for North America. Tesla fans have long-awaited a cheaper entry-level model; this was supposed to be the $25,000 Model 2. But the development of that electric vehicle was shelved earlier last year as CEO Elon Musk began to lose interest with car-making in favor of humanoid robots.
However, car sales still make up the overwhelming majority of Tesla's revenue, and the removal of the IRS clean vehicle tax credit at the end of September may have juiced US EV sales in Q3 2025, but sales are expected to dip significantly in the current quarter.
The new Standard Range Model Y starts at $39,990, with 321 miles (516 km) of range from its rear-wheel drive powertrain, compared to the now-Premium rear-wheel drive Model Y, which has an EPA range of 357 miles (574 km). In the past, Tesla has software-locked batteries to a smaller configuration; however, here we believe the Standard Range Model Y uses a 69 kWh pack.
The cheaper Model Y is decontented in other ways. There's no AM or FM radio, and no touchscreen in the back for passengers to control their climate settings. The roof is metal, not panoramic glass, and there's a simpler center console and manual adjustment for the steering wheel. Tesla has reduced the choice of interior trim materials, there's a less-capable particulate filter (with no HEPA mode), and there's no seat heating for the back seats or cooling for the front seats.
Other changes include fewer paint colors, no adaptive high beams for the headlights, different LED headlights for the new light bar on the refreshed Model Y, manual side mirrors, and passive dampers. There's also no Autosteer, although the hardware must still be present, as it's possible to pay to add FSD to the Model Y Standard Range.
A Standard Range Model 3 is similarly decontented, with a $36,990 starting price.
Despite these price and content cuts, the Standard Range Models 3 and Y are still several thousand dollars more expensive than the cheapest Models 3 or Y last week—the price reduction is less than the $7,500 clean vehicle tax credit.
Compare Tesla's price cuts with another approach: Last week, Hyundai slashed between $7,600 and $9,800 from the price of US-built Ioniq 5s. Although the long-range Ioniq 5 won't go quite as far as a long-range Model Y, it charges far faster and is more than $2,000 cheaper than the Tesla after Hyundai's price cut.
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