The electric automaker’s new model comes as part of efforts to address slumping sales.
Published On 7 Oct 2025
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Tesla unveiled more affordable versions of its best-selling Model Y SUV and its Model 3 sedan at $39,990 and $36,990, respectively, as the electric vehicle (EV) manufacturer seeks to reverse falling sales and waning market share amid rising competition.
The EV maker announced its new models on Tuesday.
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Chief Executive Elon Musk has for years promised mass-market vehicles, though last year he cancelled plans to build an all-new $25,000 EV.
Late last year, Musk said the vehicle would be priced below the “key threshold” of $30,000, including US EV tax credits.
In the United States, prices effectively rose by $7,500 at the end of last month, when the EV tax credit ended. That helped goose quarterly sales to a record, but expectations are that they will slow down for the rest of the year, unless the affordable car comes to the rescue.
“The desire to buy the car is very high. [It is just that] people don’t have enough money in the bank account to buy it,” Musk said in July during Tesla’s second-quarter earnings call. “So the more affordable we can make the car, the better.”
Tesla had posted two clips on X over the weekend, igniting excitement among fans. One video shows headlights peering out of the dark and another shows what looks like a wheel spinning for a few seconds, followed by “10/7” — the US format for the date October 7.
Musk initially promised that production of the vehicle would start by the end of June. But Tesla only made what it called “first builds” of the car, it said in July, adding that it would be available for customers sometime in the last three months of the year.
Sales slowdown
Tesla has already been grappling with slowing sales of its ageing lineup as competition has grown rapidly, especially in China and Europe, where Musk’s far-right political views have also undermined brand loyalty.
Earlier this year, Tesla launched a refreshed version of the Model Y with improvements including new light bars and a rear touchscreen.
Musk has been pivoting the company toward artificial intelligence, focusing on robotaxis and humanoid robots. Tesla has said it will launch more affordable vehicles in its lineup, but has not provided details.
Sources have told the Reuters news agency that the EV maker also plans to roll out a stripped-down version of its Model 3 midsize sedan.
Affordable cars will also be key to Tesla delivering 20 million vehicles over the next decade – one of the several operational and valuation milestones set by the company’s board as part of its proposed $1 trillion pay package for Musk.
Markets are not responding well to the new product, which analysts say is a result of the price point.
“We believe the launch of a lower cost model represents the first step to getting back to a ~500k quarterly delivery run-rate which will be important to stimulate demand for its fleet with the EV tax credit expiring at the end of September, but we are relatively disappointed with this launch as the price point is only $5k lower than prior Model 3’s and Y’s,” Dan Ives, analyst at Wedbush Securities, said in a note provided to Al Jazeera.
On Wall Street, Tesla’s stock price as of 3:15pm in New York (19:15 GMT) was down by almost four percent.
