Tesla officially introduced new, lower-cost versions of its best-selling vehicles, the Model 3 and Model Y, dubbed the “Standard” trims, yesterday. It marks the company’s most concerted effort yet to capture a broader, more price-sensitive segment of the electric vehicle market, particularly following the recent expiration of key US federal EV tax credits.

Tesla Launches “Standard” Versions of Model Y and Model 3

The new rear-wheel-drive (RWD) variants are positioned as the entry point to the Tesla lineup, offering a simplified and stripped-down package designed to reduce manufacturing costs and lower the barrier to entry for prospective EV buyers.

The new “Standard” models are available for order immediately on Tesla’s online design studio, with deliveries expected to begin in the final months of the year. The Model 3 ‘Standard’ starts at $36,990 while the Model Y ‘Standard’ starts at $39,990.

How Do the New Models Differ from the Previous Models?

However, the new models are toned-down versions of the previous avatars and rank lower on range as well as performance. Here are some of the changes in the Standard models as compared to their previous versions

• Reduced Battery Size: Both Standard models utilize a smaller battery pack, estimated to be around 69.5 kWh of usable capacity, which impacts both range and charging speed.
• Lower Range: The EPA-estimated range is reduced. Both Standard models achieve a competitive 321 miles of range, compared to 363 miles for the Model 3 Premium RWD and 357 miles for the Model Y Premium RWD.
• Slower Acceleration: The 0–60 mph times are slower. The Model 3 Standard is rated at 5.8 seconds, and the Model Y Standard is rated at 6.8 seconds, a noticeable drop from their Premium siblings. Peak Supercharging speeds are also slightly reduced, capped at a lower maximum compared to the Premium models.
• Changes to Interior and Limited Paint Options: The full vegan leather upholstery is replaced with a textile and vegan leather combo. Front-seat ventilation and second-row heated seats have been removed. Exterior paint choices are limited to a selection of three monochrome colors (Grey, White, and Black)
• Rear Entertainment Screen: The touchscreen for rear passengers, introduced in recent refreshes, is deleted. Also, the premium audio system is replaced with a more basic 7-speaker system with no subwoofer.
• Steering Wheel: The steering wheel column is now manually adjustable, as opposed to electrically adjustable.
• Ambient Lighting: The enhanced, multi-color ambient interior lighting has been removed or simplified.
• Autosteer Removed: The most significant software change is the removal of Autosteer (lane-centering assist) as a standard feature, leaving only basic Adaptive Cruise Control. Customers wishing for the lane-centering functionality would need to purchase the full “Full Self-Driving” (Supervised) package.

Tesla Reported a Rise in Q3 Deliveries

Meanwhile, after reporting a year-over-year decline in deliveries for two consecutive quarters, Tesla reported a 7% rise in its Q3 deliveries. Analysts largely attribute the surge in deliveries to a rush of American consumers eager to take advantage of the $7,500 federal EV tax credit before its expiration on September 30. This policy deadline is believed to have “pulled forward” a substantial amount of demand from the fourth quarter into the third, creating an exceptionally strong end to the period.

While the Q3 results were a major win, many analysts are expressing caution about the sustainability of this momentum in the final quarter of the year. Amid an aging product lineup up Tesla has been working on an affordable model to revive its sales. However, the “Standard” Model 3 and Model Y have failed to impress, and Tesla stock closed sharply lower today as markets gave them a thumbs down.

Tesla Looks Set to Lose EV Leadership Crown

Meanwhile, BYD looks set to grab the title of the world’s largest seller of battery electric cars from Tesla this year despite reporting a YoY fall in its September deliveries and reportedly withdrawing its ambitious target of selling 5.5 million cars this year.

BYD has been particularly taking market share in Europe, and its sales more than tripled in August. The Chinese auto giant outsold Tesla for the second consecutive month and held a 1.3% market share.

Tesla has been in Europe for quite some time now and even has a Gigafactory in Germany. BYD, on the other hand, officially entered the European market in 2022 and has now surpassed Tesla’s sales, despite facing tariffs in the EU.

Notably, BYD surpassed Tesla’s total sales in 2022, even as the US EV giant retained the title of the biggest seller of battery electric vehicles (BEVs). It hit yet another milestone when its 2024 revenues surpassed those of Tesla. BYD’s annual revenues rose 29% YoY to $107 billion last year, while Tesla’s revenues were around $97.7 billion. The steep rise in BYD’s sales was led by a record 4.27 million deliveries, which was well ahead of Tesla, which reported a YoY fall in its 2024 deliveries – the first in the company’s history.

Notably, in 2011, Tesla CEO Elon Musk laughed at the possibility of BYD becoming a competitor to Tesla. However, the Chinese company has proven critics wrong and has emerged as a serious competitor to Tesla, not only in China but also in global markets.

Musk’s Politics Might Be Hurting TSLA’s Sales

Along with the slowing growth in the EV industry and rising competition, Musk’s political activities are also hurting Tesla, particularly in the US and Europe. The Cybertruck is a case in point here, as the model’s unique shape made it the target of those protesting against Musk.

Musk’s embrace of right-wing parties in Europe has also alienated some buyers. Protests and public backlash in several European cities, coupled with concerns over his political endorsements, have created a reputational headwind that is proving difficult to overcome. In a market where consumers are increasingly conscious of corporate values and social responsibility, Musk’s actions appear to be directly impacting the brand’s appeal.

In a related incident, earlier this year, 10 drivers in Paris filed a lawsuit against Tesla, alleging that the perception about its cars becoming political symbols “prevents them from fully enjoying their car.”