After years of promises for a more affordable electric vehicle, Tesla has launched stripped-down versions of its Model 3 and Model Y with lower starting prices. The Model 3 Standard now starts at $38,630, while the Model Y Standard begins at $41,630.
The pricing reveals a mixed result. The Model 3 dips below the $40,000 threshold that many budget-conscious buyers watch. However, the Model Y remains above that mark despite Tesla’s “affordable” marketing. Only the Model 3 truly achieves the sub-$40,000 milestone.
These aren’t entirely new vehicles. Instead, Tesla removed significant features from existing models to lower the base price. The Model Y Standard costs $5,000 less than the previous entry-level version, but the extensive feature cuts raise questions about the actual value. The company used cost-cutting rather than engineering innovation to reach these price points.
The timing complicates the affordability scenario. Both models cost $2,000 more than they would’ve just one week earlier because the US federal EV tax credit expired. Ironically, Elon Musk advocated for eliminating this tax credit that previously helped reduce costs for consumers. The expiration coinciding with the launch reduces the real-world affordability gains.
This release represents a significant shift from Tesla’s original plans. The company initially promised a $25,000 vehicle nicknamed “Model 2” designed for mass market entry. Elon Musk abruptly canceled that project, as Reuters reported. Musk denied the cancellation at first, but Reuters proved correct. The cancellation redirected focus toward these modified existing models instead.
Tesla also missed its own timeline. The company promised production would begin in the first half of 2025, but that deadline passed without deliveries. Recent leaks preceded the official announcement after extended delays.
These Standard models now serve as Tesla’s cheapest alternatives, competing in an increasingly crowded affordable EV segment. The launch introduces a new trim-naming convention with Standard, Premium, and Performance tiers to organize the lineup. The Model 3 Standard achieves a notable pricing milestone for buyers seeking entry into the Tesla brand.
However, the stripped-down features and higher real-world costs compared to last week create a complicated value proposition for potential customers. Buyers should also consider that Tesla vehicles experience rapid depreciation, with the Model 3 retaining only 37.3% of its value after five years compared to luxury competitors that often maintain over 50% of their original value.