Tesla is attempting to reverse a trend of slowing sales by introducing new, more accessible versions of its Model Y and Model 3 electric vehicles. The newly designated “Standard” variants offer an approximate driving range of 321 miles (517 kilometers). The Model Y Standard is priced just under $40,000, while the Model 3 Standard retails for less than $37,000.
The electric vehicle maker is navigating a challenging market environment, facing increased competition from global auto manufacturers and pressure from an aging vehicle portfolio. The company has also contended with factors such as boycotts, impacting its ability to attract new buyers. The market’s response to the announcement was a sharp sell-off of Tesla stock, signaling that investors do not foresee these new models providing a substantial turnaround.
According to market analysts, the expectation was for a more transformative product launch, rather than an update to existing models. The new Standard versions feature a more basic interior, including a reduction in audio system components and the use of fabric upholstery instead of microsuede for the Model Y. The panoramic glass roof and a second-row touchscreen are also absent. These vehicles are entering a competitive segment dominated by strong contenders like the Ford Mustang Mach-E, Chevrolet Equinox EV, and Hyundai Ioniq 5.
These latest “standard” models, while cheaper, are still considerably more expensive than the long-touted $25,000 price point for an entry-level Tesla. The timing of their release also coincides with the expiration of a crucial $7,500 federal tax credit for electric vehicles, which could dampen consumer demand. The significant drop in Tesla’s stock price on Tuesday, following an earlier gain, underscores investor doubt about the efficacy of these cost-cutting measures in driving future growth.