Tesla Discontinues Its CHEAPEST Car – Only Luxury Models From Now On?

As Tesla discontinues its most affordable Model 3, many are left wondering about the future of accessible electric vehicles.

At a Glance

  • Tesla discontinues its cheapest model, the Model 3 Standard Range, priced at $38,990.
  • This decision aligns with broader strategic goals amid increased US-China tariffs impacting production.
  • The Model 3 Long Range Rear-Wheel Drive now becomes the cheapest Tesla at $42,490.
  • Tesla’s focus shifts increasingly towards the Model Y in the US market.

Tesla Ends Sales of its Economical Model

Tesla removed the Standard Range Rear-Wheel Drive Model 3 from its US website, leading many to worry that the brand will lean too heavily into the luxury market. And not everybody can afford a $100k CyberTruck.

The discontinued model was the most accessible of Tesla’s lineup, priced at $38,990. This news substantially narrows options for potential Tesla buyers on a budget. Industry analysts suggest the move comes partially due to US tariffs on Chinese-made components, as this model relied on lithium iron phosphate batteries sourced from China.

The US government has imposed a 100% tariff on EVs imported from China, with a 25% tariff on the necessary EV batteries and key minerals. These measures significantly affect the affordability and accessibility of electric vehicles by eliminating eligibility for the $7,500 federal tax credit. As the competition intensifies on a global stage, especially with increasing EV launches in China, Tesla’s move might be seen as a strategic pivot to focus on profitability and innovation.

Shifting Focus to More Profitable Models

Additionally, market analyst Dan Ives described Tesla’s decision as strategic, aligning with a concentrated effort to push the Model Y in the US. The Model Y remains a priority, with a starting price of $44,990. With the evaporation of the Standard Range, the Model 3 Long Range Rear-Wheel Drive model, at $42,490, assumes the role of the company’s most affordable vehicle. These changes reflect an effort to balance technology with economic sustainability.

Shuttering less profitable lines is part of a broader strategy as Tesla navigates the complexities of the so-called US-China “Cold Tech War.” These challenges are not unique to Tesla, with the electric vehicle sector grappling universally with affordability and competition from other manufacturers. While Tesla did not provide an official comment on the discontinuation, it highlights shifting market dynamics and economic pressures.

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The Road Ahead

Tesla continues to adjust its pricing and product offerings as competitors like Xpeng, Nio, and BYD introduce more cost-effective electric vehicles. With over 100 new EV models expected in China by the end of 2024, Tesla faces intensified price competition. On a potentially positive note for budget-conscious buyers, Tesla is reportedly developing a more affordable vehicle projected for release in 2025, possibly a new model or a simpler version of the Model 3.

As for the long-term implications of this strategy shift, Tesla’s focus on mid-to-upper range models could either solidify its innovation-driven brand image or risk alienating a cost-sensitive audience. It’s a delicate balance in an evolving market that demands both affordability and world-leading technology.

What we do know for sure is that if Trump wins in November, Elon Musk will have his ear – and if that’s the case, we can expect some common sense policy-making that could make electric cars more affordable for everybody. Let’s hope!