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Tesla Unveils Cheaper Version of Its Best-Selling EV

Discount doesn't quite cover expired EV tax credit
By Newser Editors and Wire Services
Posted Oct 7, 2025 2:48 PM CDT
Tesla Unveils Cheaper Version of Its Best-Selling EV
A Tesla Model Y and other Tesla vehicles sit at a dealership in Kennesaw, Georgia.   (AP Photo/Mike Stewart, File)

Tesla announced the rollout of a new, cheaper version of its best-selling electric car on Tuesday in hopes the offering will help revive flagging sales. The new Model Y, costing just under $40,000 with a stripped-down interior, follows a slump in Tesla sales covering most of the past year due to anti-Elon Musk boycotts targeting the company, the AP reports. Tesla stock was down more than 4% in afternoon trading Tuesday. It had closed Monday up more than 5% after Tesla had teased fans with cryptic postings on social media about an imminent product announcement. The stock is near all-time highs even though both sales and profits have plunged in recent quarters.

Compared to previous models, the $39,990 new version comes with a shorter 321-mile driving range, fewer audio speakers, and a fabric interior, not microsuede. The new model also lacks a panoramic glass roof and a touchscreen in the second row. The new offering faces stiff competition in the $40,000 range for EVs from vehicles including Ford's Mustang Mach-E, Chevrolet's Equinox EQ and Hyundai's Ioniq 5. The Wall Street Journal notes that the discount doesn't fully cover the $7,500 EV tax credit that expired last week. The company is also offering a cheaper version of its Model 3 for under $35,000. Like the new Model Y, the model has cut down on the driving range, ambient lighting, and other features.

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