Tesla (TSLA) has rolled out a cheaper version of its popular Model Y SUV in the U.S., priced under $40,000, signaling a push to attract more budget-conscious buyers and boost sales. The move comes as Tesla seeks to defend its market share amid a challenging start to 2025, marked by rising competition and weaker global demand. TSLA stock gained over 1% in pre-market trading on Wednesday.
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Tesla’s website shows that the new long-range rear-wheel drive Model Y is priced at $44,990 before a $7,500 federal tax credit. With the credit applied, the cost drops to $37,490. Deliveries of the new Tesla Model Y are expected to begin in about one month.
High Hopes on Tesla’s New Model Y
The Tesla Model Y Long Range rear-wheel drive boasts an EPA-estimated 357-mile range, making it one of the most efficient electric SUVs. With Tesla’s Supercharger network, it can add 182 miles of range in just 15 minutes, significantly reducing downtime on longer trips. Additionally, the Model Y is compatible with Tesla’s Full Self-Driving (FSD) system, currently available in supervised mode.
Amid falling sales and intensifying competition, Tesla’s cheaper Model Y offers a glimmer of hope for investors and analysts. For context, the company’s sales fell 13% year-over-year in Q1 2025, marking its weakest quarter in three years. Deliveries also dropped 32% sequentially, signaling a significant slowdown. Experts are hopeful that Tesla’s affordable Model Y will help the company expand its market reach and attract a broader range of consumers, especially those looking for an EV with long range at a more accessible price point.
Earlier in 2025, Barclays analyst Dan Levy stated that a new low-cost model is essential to the company’s growth strategy, as growth potential from Tesla’s existing lineup seems limited. Levy has a Hold rating on TSLA stock with a price target of $275.
Is Tesla Stock Rated a Buy?
On Wall Street, analysts have maintained a neutral stance on Tesla stock. According to TipRanks, TSLA stock has received a Hold consensus rating, with 16 Buys, 10 Holds, and 11 Sells assigned in the last three months. The average Tesla stock price target is $284.23, suggesting a potential upside of 3.2% from the current level.
