Tesla Unveils Under-US$40,000 Versions of its Top-Selling EVs

Despite coming off a record quarter of vehicle deliveries, Tesla’s global sales have fallen around six per cent year-to-date

Bloomberg News

While the company started building a more affordable model in June, they opted to put off production until after the U.S. phased out up to US$7,500 federal tax credits. Photo by Mike Stewart/AP Photo/Postmedia files

Get the Latest US Focused Energy News Delivered to You! It’s FREE:

Tesla Inc. introduced new versions of its top-selling models priced at under US$40,000, making its main vehicles more affordable to counteract the loss of United States incentives for electric cars.

The new standard versions of the Model 3 sedan and Model Y sport utility vehicle start at US$36,990 and US$39,990, Tesla’s website shows. Those starting prices are about 13 per cent and and 11 per cent cheaper, respectively, than premium longer-range versions of each model.

Tesla shares fell as much as 4.5 per cent as of 3:40 p.m. Tuesday in New York. The stock is up about eight per cent this year.

Tesla has been building anticipation for more affordable vehicles since early last year, when some investors and company insiders were alarmed by chief executive Elon Musk’s decision to de-emphasize a roughly US$25,000 model. The CEO has instead prioritized efforts to develop self-driving technology and humanoid robots.

Executives said during Tesla’s most recent earnings call that while the company started building a more affordable model in June, they opted to put off production until after the U.S. phased out up to US$7,500 federal tax credits. Chief financial officer Vaibhav Taneja cautioned that output will ramp up slower than initially anticipated.

Tesla’s new models offer less battery range and are stripped of features including ambient interior lighting and a second-row screen.

While Tesla is coming off a record quarter of vehicle deliveries, its global sales have fallen around six per cent year-to-date. Demand for EVs in its largest market is expected to drop off after the U.S. eliminated of U.S. incentives.

Analysts at BloombergNEF expect U.S. sales of battery-electric and plug-in hybrid models to drop to around 332,000 vehicles in the final three months of the year, from almost 500,000 units in the third quarter.

—With assistance from Joe Carroll.