TLDR
- Tesla unveiled cheaper versions of Model Y ($39,990) and Model 3 ($36,990) on Tuesday, but TSLA stock dropped 4.5% as investors found pricing disappointing
- The new models face tough competition in Europe where over a dozen EVs are priced below $30,000 from European and Chinese brands like BYD Dolphin Surf ($26,830) and Dacia Spring ($16,800)
- Tesla’s European market share has fallen to about 1.5% from around 3% since 2023, partly due to aging product lineup and consumer backlash against Elon Musk’s political views
- Analysts are divided on the launch, with some disappointed the new models are only $5,000 cheaper than existing trims and still above the desired sub-$30,000 price point
- Wall Street maintains a Hold rating on Tesla with an average price target of $350.58, representing 19% downside from current levels
Tesla stock fell more than 4% on Tuesday following the launch of cheaper versions of its Model Y and Model 3 vehicles. The new Model Y Standard starts at $39,990 while the Model 3 base version is priced at $36,990.
Investors and analysts had hoped for more aggressive pricing. The market reaction suggests these numbers didn’t meet expectations.
Wedbush analyst Daniel Ives expressed disappointment that the new models are only about $5,000 cheaper than the next trim levels. Many had anticipated pricing below $30,000 to better compete in crowded markets.
Meet Model Y Standard & Model 3 Standard – our most affordable vehicles
Ultra-low cost of ownership, engineered for safety & comes with the best Tesla features you love
– 321 mi of range
– Extreme efficiency that takes you farther + saves you $$
– Minimal maintenance
– Can… pic.twitter.com/2cMQ5NW6Yf— Tesla (@Tesla) October 7, 2025
The launches come as Tesla tries to reverse declining sales. Global deliveries fell in 2024 for the first time and are forecast to drop another 10% this year according to Visible Alpha estimates.
CEO Elon Musk reportedly cancelled plans for a true $25,000 vehicle. Instead, the company opted to create lower-priced versions of existing models.
Europe Presents Tough Competition
The European market poses particular challenges for Tesla’s budget strategy. More than a dozen EVs are already available below $30,000 in the region.
BYD’s Dolphin Surf starts at 23,000 euros ($26,830). The Dacia Spring costs just 16,800 euros. Citroen’s e-C3 SUV is priced at 23,300 euros.
Volkswagen plans to launch an ID.Polo compact hatchback EV for under 25,000 euros next year. This will add another competitor to the budget segment.
Tesla’s European market share has dropped to about 1.5%. That’s down from roughly 3% in 2023 when the Model Y was the region’s best-selling car.
The decline stems partly from an aging product lineup. Some consumers have also pulled back due to Musk’s support of far-right politicians.
In contrast, only the Nissan Leaf falls into the budget EV category in the United States. This gives Tesla more breathing room in its home market.
Analyst Perspectives Split on Impact
Shawn Campbell from Camelthorn Investments questioned whether the new pricing will boost demand. “Tesla needs a sub-30k EV,” Campbell said.
Pedro Pacheco from Gartner noted the Model Y Standard would likely be cheaper than BYD’s best-selling Seal plug-in hybrid SUV. This could help in some competitive scenarios.
Sam Fiorani from AutoForecast Solutions called the European market “fierce.” The abundance of cheaper options could hamper Tesla’s prospects there.
The company did see some momentum in September. Tesla halted sales declines in certain European markets after refreshing the Model Y with interior and exterior upgrades.
Third-quarter global deliveries hit record levels. But the Model Y remains Tesla’s last mass-market model since its 2020 launch.
Wall Street currently holds a mixed view on the stock. The consensus rating is Hold based on 14 Buy ratings, 13 Holds, and nine Sells.
The average price target sits at $350.58. This represents a 19% downside from current levels.
Both new models can be ordered immediately through Tesla’s website. Deliveries are scheduled to begin between December 2025 and January 2026 for most locations.
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