Tesla Unveils Cheaper Versions of Model Y SUV, Model 3 Sedan
Pricing for Both Under $40,000 to Offset Loss of $7,500 Federal Tax Credit on EVs
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Tesla Inc. introduced new versions of its top-selling models priced at under $40,000, making its main vehicles more affordable to counteract the loss of U.S. incentives for electric cars.
The new standard versions of the Model 3 sedan and Model Y sport utility vehicle start at $36,990 and $39,990, Tesla’s website shows. Those starting prices are about 13% and and 11% cheaper, respectively, than premium longer-range versions of each model.
Tesla shares fell as much as 4.5% as of 3:40 p.m. on Oct. 7 in New York. The stock is up about 8% this year.
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Tesla has been building anticipation for more affordable vehicles since early last year, when some investors and company insiders were alarmed by CEO Elon Musk’s decision to de-emphasize a roughly $25,000 model. Musk has instead prioritized efforts to develop self-driving technology and humanoid robots.
Executives said during Tesla’s most recent earnings call that while the company started building a more affordable model in June, they opted to put off production until after the U.S. phased out up to $7,500 federal tax credits. Chief Financial Officer Vaibhav Taneja cautioned that output will ramp up slower than initially anticipated.
Tesla’s new models offer less battery range and are stripped of features including ambient interior lighting and a second-row screen.
While Tesla is coming off a record quarter of vehicle deliveries, its global sales have fallen around 6% year to date. Demand for EVs in its largest market is expected to drop off after the U.S. eliminated the incentives.
Analysts at BloombergNEF expect U.S. sales of battery-electric and plug-in hybrid models to drop to around 332,000 vehicles in the final three months of the year, from almost 500,000 units in the third quarter.
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