Tesla Launches New Budget-Friendly Model Y Version in the U.S.

Tesla has rolled out a fresh and more economical variant of its well-liked Model Y electric SUV within the United States — albeit with a minor performance compromise.

The latest version, named the Model Y Long Range Rear-Wheel Drive, begins at $44,990 prior to the application of federal tax credits or regional incentives. This price is $4,000 lower than the Long Range All-Wheel Drive model, which is listed at $48,990.

This newly introduced model is equipped with a single motor that drives the rear wheels, leading to a slightly less swift 0–60 mph time of 5.4 seconds, in contrast to the 4.6 seconds for the dual-motor All-Wheel Drive variant. Nonetheless, it boasts an extended driving range — 357 miles as opposed to 327 miles, based on Tesla’s data.

When factoring in the $7,500 federal tax credit, the effective starting price for the Rear-Wheel Drive Model Y reduces to $37,490. Tesla indicates that deliveries for this model are expected to commence in three to five weeks, while the All-Wheel Drive variant is ready for immediate dispatch.

This more affordable choice could potentially enhance Tesla’s sales, particularly as the company aims to rebound from a tough financial quarter. Tesla recently announced a 70% decline in net income for Q4 2024, and sales have decreased in Europe — even though the Rear-Wheel Drive Model Y has been accessible in multiple European markets for several weeks now.

With the launch of this budget-friendly Model Y, Tesla seems to be targeting more price-sensitive customers and aims to regain traction in a softening EV market.