TSLA: Tesla Stock Drifts Lower by 4.5% After Unveiling Sub-$40,000 Model Y and Model 3

Standard models don’t have many of the features and extras of the higher-end makes. Traders weren’t impressed as the price tag was way higher than previously suggested.

🚗 Tesla Finally Drops “Affordable” Models

• Tesla stock TSLA moved lower by 4.5% Tuesday after the EV maker finally unveiled the long-awaited budget versions of its best-sellers — Model Y Standard, going for $39,990, and Model 3 Standard, priced at $36,990. for starters.
• The new wheels come in about 11% cheaper than the previous base-level versions. But calling them “affordable” might be a stretch — they’re still far from the $30,000 target Elon Musk once dubbed the target number for mass-market adoption.
• The missing $7,500 federal tax credit weighed on the mood. Without it, the new cheaper Model Y actually costs $2,500 more than the older base model did just last month.

💸 Stripped Features, Stripped Enthusiasm

• Traders weren’t thrilled. The two new versions are essentially the same vehicles (nothing new or creative) that exist now, just stripped of a lot of features that are available with the premium designs.
• The Standard trims cut corners where it counts: no second-row touchscreen, no Autopilot, no glass roof, and reduced range. In other words, affordability came at a cost.
• Analysts were expecting a deeper price cut — something closer to $35,900 for the Model Y — that would’ve meaningfully reignited demand, especially after the federal EV tax credit expired. The smaller cut knocked investor confidence in the company’s strategy to fend off China’s low-cost EV rivals (BYD says hi).

⚙️ Tesla’s Balancing Act

• Tesla is walking a fine line between defending margins and maintaining sales volume. The company already faces thinner profit per car after multiple price cuts in 2024–2025 to stay competitive.
• Musk’s push for affordability comes as global rivals roll out cheaper EVs at scale, particularly in Europe and Asia — two markets where Tesla’s sales have sagged.
• Despite Tuesday’s pullback, Tesla shares remain up 14% year to date, fueled by record third-quarter deliveries despite shaky outlook and lack of corporate guidance. But if the affordable Model Y and Model 3 don’t move the needle, Tesla might have to rethink what “mass-market” really means.