Tesla’s sales are plummeting, so it’s adding a cheaper all-wheel-drive Model Y in the US in a bid to drum up interest
- Tesla launches cheaper all-wheel-drive Model Y
- The car forgoes some luxuries but costs $41,990
- Cheaper models could help Tesla fend off competition
Tesla sales have been under strain around the world of late, with numbers falling to their lowest level in nearly four years in November 2025 in the United States, according to statistics from Cox Automotive, via Reuters.
The picture is even bleaker in Europe, with figures down by as much as 88% in some regions.
While sales of electric vehicles in the United States have generally seen a sharp slowdown, made worse by the Trump administration’s cancellation of the $7,500 federal tax credit, Elon Musk’s once-innovative brand has been hit particularly hard.
The company’s total sales fell nearly 23% in 2025 from the previous year, despite the launch of cheaper Standard versions of the Model 3 and Model Y.
The company is now fighting back with a more affordable Model Y AWD version that it hopes will increase demand, thanks to a performance boost at very little cost.
The $41,990 (before incentives) rear-wheel-drive Model Y sits just above the base rear-wheel-drive Model Y, offering an EPA range of 294 miles and a 0-60 mph sprint time of 4.6 seconds, more than two seconds faster than the entry-level rear-wheel-drive variant.
Although Tesla has ditched the “Standard” naming convention in its marketing materials, this new fifth addition to the lineup very much follows the same pattern as the cheaper cars in the lineup, eschewing the premium audio system, second-row touchscreen, and open glass roof for much more basic options.
So, like its rear-wheel drive counterpart, this new car lacks the HEPA filter, touchscreen-adjustable air vents, vegan leather interior, power-folding seats, adaptive high beams and frequency-dependent dampers of the more expensive Premium counterparts.
All-electric range is also slightly lower in the rear-wheel-drive version, thanks to the second motor and additional performance available, with 321 miles versus 294 miles.
Tesla needs more affordable cars
The added benefits of all-wheel drive, as well as the added pace for an extra $2,000, will appeal to North American buyers – a group sorely lacking in electric vehicle choices due to the decision by many global automakers not to export to the tariff-riddled market.
As we’ve said before, the latest iterations of the Model 3 and Model Y are the best cars Tesla has ever made, and even in the most basic “Standard” versions, they still represent a great, hassle-free introduction to the world of electric vehicles. Especially considering that Tesla’s Supercharger network remains one of the simplest and most transparent ways to charge.
Tesla’s choice to offer cheaper versions of its best-sellers is smart and timely because, despite declining demand for electric vehicles in the United States, a growing number of high-end electrified competitors from BMW, Volvo and Mercedes-Benz are expected to arrive in the coming months.
If Tesla wants to remain competitive, it must undercut the competition.
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