Tesla Inc (NASDAQ:TSLA) recently unveiled the lower-priced Model 3 Standard and Model Y Standard. Coming with fewer features than the traditional models, the vehicles have cheaper price points than Tesla's main vehicles.
The catch is that with the expiration of the federal electric vehicle tax credit, consumers are actually paying more for the models with less features than they would have paid for the regular version two weeks ago.
Tesla Lowers Starting Costs
The new Tesla Model Y Standard comes with a starting price of $39,990, while the Standard Model Y comes with a price of $36,990.
The base price of the Model Y Standard jumps closer to $41,630 after order fees, according to a report from InsideEVs.
While this marks one of the cheapest base prices for Tesla vehicles ever, it comes after the expiration of the $7,500 tax credit at the end of September.
Tesla saw strong demand in the third quarter with deliveries beating analyst estimates. One of the reasons cited by the company was consumers taking advantage of the tax credit before expiration.
Consumers who didn't take advantage of the tax credit could now be forced to pay up.
In September, the original Tesla Model Y came with a cost of $37,490 after the tax credit, while the Model 3 came with a cost of $34,880 with the tax credit. The prices were $2,500 and $2,000 cheaper respectively than the two models today, as reported by Electrek.
The new standard versions of the vehicles come with fewer features like less speakers, no subwoofer, no autosteer, no panoramic roof, different seats, no second-row display touch screen, no ambient lighting, no AM/FM radio and no lane centering controls.
Adding all these items together means consumers are now paying more for a vehicle with less features.
Are Cheaper Models Enough?
After beating third-quarter delivery estimates, attention now turns to the fourth quarter, which could see a drop-off in demand.
Tesla has promised for years to release more affordable models, but the new Standard, cheaper versions of the Model 3 and Model Y aren't exciting consumers or analysts like the promise did years ago.
Tesla once promised to release an electric vehicle in the $25,000 price range, known as the Model 2. That plan was later scrapped by the company with a new focus on robotaxis and autonomy.
The company's previous language also suggested releasing new more affordable models, before it later switched to cheaper versions of the already existing vehicles.
With fewer features, analysts think the new vehicles should have come with a cheaper price point, especially considering the EV tax credit expiration.
The Standard Model Y also comes with a price point that is more expensive than some of the rival vehicles like the Chevrolet Equinox EV from General Motors Company (NYSE:GM) and the Mustang Mach-E from Ford Motor Company (NYSE:F).
General Motors also unveiled the new Chevrolet Bolt that comes with a starting price point of $28,995.
With multiple EVs cheaper than the new cheaper Tesla vehicles, consumers will have to decide which features are worth a premium.
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Image: Courtesy of Tesla
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