February 2 (Reuters) – Electric carmaker Tesla has launched a new all-wheel drive version of its best-selling Model Y SUV in the United States, priced at $41,990, according to the company’s website on Monday.
The new all-wheel drive model sits above the cheaper rear-wheel drive “standard” version.
This comes after Tesla launched lower-priced “standard” versions of its Model Y and Model 3 sedans in October, which cost about $5,000 less than the previous base models. These trims have become a key part of Tesla’s 2026 strategy, lowering entry prices to attract more cost-conscious buyers without having to wait for a new mass-market vehicle.
In the U.S., Tesla’s “standard” models bring prices closer to pre-federal incentive levels, helping to offset higher effective purchase costs.
In other markets, prices were slashed by about $5,000, a more significant reduction aimed at boosting demand amid increased competition.
The broader electric vehicle market has also cooled since the Trump administration ended a $7,500 federal tax credit in September. At the same time, Tesla is facing increasing global competition.
Analysts warn that the increased share of low-priced cars could put pressure on profit margins unless Tesla can offset the impact by lowering manufacturing costs or increasing software and services revenue.
Separately, CEO Elon Musk said last week that the automaker would halt production of its Model S and Model X sedans and instead use space at its California factory to build humanoid robots.
(Reporting by Ananya Palyekar and Akash Sriram in Bengaluru; Editing by Subhranshu Sahu and Sherry Jacob-Phillips)