Tesla Unveils Cheaper Model Y And Model 3—Countering Tax Credit Loss

Core Viewpoint - Tesla has announced plans to introduce more affordable versions of its Model Y and Model 3 vehicles, aiming to counteract the recent loss of tax incentives for electric vehicle purchases [1][3]. Tesla - The new Model Y Standard and Model 3 Standard are priced at $37,990 and $34,990, respectively, which is lower than the Premium versions priced at $44,490 and $41,990 [2]. - Tesla's last product unveiling was in 2019 with the Cybertruck, which has faced delays in deliveries until November 2023 due to production and battery supply issues [2]. Market Position - The Model Y accounted for 7.4% of the global electric vehicle market through Q1 2025, maintaining its status as the bestselling EV worldwide, ahead of the Model 3 and BYD's Seagull [3]. - Tesla plans to use less premium materials for the new models to mitigate the impact of the $7,500 federal tax credit expiration for electric vehicle buyers [3]. Production and Delivery - Production of the more affordable model began in June, with executives indicating high demand despite financial constraints for potential buyers [4]. - Tesla delivered a record total of 497,099 vehicles in the third quarter, with approximately 97% being Model 3 and Model Y vehicles [4]. Background - Speculation about a new product release intensified with teaser advertisements and social media posts suggesting a Model Y variant [5]. - Elon Musk has previously indicated a desire to create more affordable electric vehicle options, although plans for a $25,000 model were reportedly scrapped in favor of enhancing existing designs [5]. Financial Outlook - Tesla is set to report third-quarter earnings on October 22, with expectations of earnings per share at $0.49 and revenue of $25.1 billion, reflecting increases of 22.5% and 11.6% over the previous quarter, respectively [6].