The Tesla Model Y and Model 3 Standard Are Cheaper—but Still Not Cheap

For nearly two decades, CEO Elon Musk promised that Tesla would make a more affordable electric vehicle, to, as he said in 2006, “help accelerate the move from a mined hydrocarbon economy to a solar electric economy.” Is it finally here? A little, sorta.

On Tuesday, Tesla announced a new standard Model Y and Model 3, versions of its popular compact SUV and sedans with a few premium touches and features to bring the price down to $39,990 and $36,990, respectively. They’re both about $5,000 cheaper than the premium variants, which won’t — but not all the time — claw back the $7,500 tax credit canceled by the GOP-led Congress last summer.

The price also puts Tesla’s new models firmly in the “more affordable” EV camp. The average transaction price for electric vehicles last month exceeded $57,000, according to Kelley Blue Book.

But the new variants, which look a lot like older versions of the Model Y and S, might not be enough to convert new customers to the electric side. “The market has been demanding a cheaper electric vehicle,” says Joseph Yoon, consumer analyst at Edmunds. An electric closer to $30,000 could once turn the heads of skeptical EV drivers, he says. This is especially true in this new auto-pricing world, where the price of any new car, no matter how it’s powered, is expected to tick by thousands of dollars.

Yoon is doubtful that a 10% price drop would prove a big winner for Tesla. “Instead of iteratively and improving their products more significantly, what [Tesla] decided to do is almost bled a little bit,” Yoon explains. For years, the electric automaker set the pace for the rest of the industry. This new variant “feels like a classic automaker move,” he says.

To shave a few thousand off the cost of the Model Y and 3, Tesla did some pinching and tucking – which is happening, at the automatic layout.