Tesla’s ‘affordable’ Model 3 and Y cost more after tax credit loss

Tesla has introduced new “Standard” trims of its Model 3 and Model Y electric vehicles, priced at $37,000 and $40,000 respectively before fees, aiming to offer more affordable options after canceling its previously planned $25,000 “Model 2.” These Standard versions feature reduced specifications compared to the Premium trims, including fewer speakers, cloth interiors instead of microsuede, no second-row touchscreen, and a smaller 69 kWh battery pack resulting in shorter range and slower acceleration. Despite these cuts, Tesla maintains core software, charging, safety features, and optional Full Self-Driving capability. However, the timing of this launch coincides with the expiration of the $7,500 federal EV tax credit for Tesla buyers, effectively making these “cheaper” models more expensive in practice. For example, the new Model Y Standard’s starting price after the loss of the tax credit is about $2,500 higher than the previous Premium Model Y’s price after rebate. This has