Tesla reveals cut-price Model 3 and Model Y

Tesla has launched lower-priced versions of the Model 3 and Model Y in the USA. The new models are intended to turn around the company’s struggling sales.

Following a 12 percent drop in vehicles sold during the second quarter of 2025, Tesla is making an attempt to win back customers. 

Although the American marque was expected to reveal a low-cost version of the Model Y SUV, the cheaper Model 3 sedan came as a surprise. 

Tesla’s reductions will help offset the impact of the U.S. government ending federal EV tax credits. These previously reduced prices by $7,500 (£5,500).

Model 3 cut back to the EV essentials

In the United States, the Model 3 Standard will cost $36,990 (£27,500), representing a $5,500 (£4,100) saving over the rest of the range. 

On the outside, the Model 3 Standard has 18-inch Prismata wheels and a choice of just three paint finishes. 

A stripped-out approach is taken to the interior, with cloth upholstery, a manually adjustable steering wheel, and no FM radio or rear touchscreen. Following recent revisions, the Model 3 will also come with indicator stalks in place of touch-sensitive buttons on the steering wheel. 

Tesla has not confirmed full technical details, but the Model 3 Standard offers an official range of 321 miles based on EPA testing.

No glass ceiling to Model Y ownership

The new Tesla Model Y Standard costs $39,990 (£29,750), undercutting Premium trim by $5,000 (£3,700), and offering a battery range of 321 miles.

A similar pared-back strategy has been applied here, with the panoramic glass roof removed, along with the FM radio and subwoofer for the sound system. 

Cloth upholstery is used inside, and there are manual side mirrors and a manually adjustable steering wheel. When it comes to climate control, there is no longer a HEPA filter to provide protection against bioweapons.

Owners of both the Model 3 and Model Y in Standard trim will have to use their smartphone to lock and unlock their car. No physical key is provided.

Tesla intends to release lower-priced cars for other worldwide markets, with more details expected soon.

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