Tesla Unveils Budget-Friendly Model 3 and Y as Growth Strategy Faces Hurdles

Tesla recently announced the launch of lower-priced versions of its Model 3 and Model Y, labeled as the "Standard Range" models. As of this Tuesday, these models are available for sale with starting prices of $36,990 for the Model 3 sedan and $39,990 for the Model Y SUV.

Both models offer an estimated range of 321 miles (approximately 516 kilometers) when fully charged, though they come with fewer features compared to the more premium rear-wheel or all-wheel-drive versions. Notably, they lack Tesla's advanced driver assistance system — Autopilot. Instead, these new offerings are equipped with basic traffic-aware cruise control, without the automatic steering function that is central to the Autopilot experience.

The release of these more affordable vehicles is aimed at helping Tesla regain growth momentum in the wake of anticipated sales declines heading into 2024. However, this pricing strategy has not completely met consumer expectations, especially when considering Elon Musk's previous discussions about a $25,000 Tesla, a project which has since been shelved.

Interestingly, the starting price of the new Model 3 Standard Range doesn't fall below the $35,000 mark — a target widely promoted by Tesla before Model 3's initial unveiling in 2016. Although this price point once helped the company penetrate mainstream markets, it was offered as a non-public option only for a brief period and not widely available.

The Standard Range models display significant differences both inside and out. Though Tesla is known for its minimalist design, the standard versions of Model 3 and Model Y push this simplicity further. Rear seats don’t come with touch screens, standard manual adjustments are required for the steering wheel and mirrors, and features like FM/AM radio are removed. Heated seats are also limited to the front only.

In terms of exterior changes, Tesla has removed the distinctive light bar from the more upscale Model Y's front, and the panoramic glass roof is absent in these versions.