Tesla recently discontinued its most affordable U.S. model, the Standard Range Rear-Wheel Drive version of the Model 3 sedan, priced at $38,990. Reuters reports that this model vanished from Tesla’s website last Wednesday, pushing the entry-level price to $42,490 for the Model 3 Long Range Rear-Wheel Drive.
This version used lithium iron phosphate (LFP) batteries from China. New U.S. tariffs, including a 100% tariff on electric vehicles (EVs) and a 25% tariff on EV batteries from China, prompted its discontinuation. These tariffs made the Standard Range Model 3 ineligible for the $7,500 federal tax credit, reducing its affordability.
Affordability remains challenging in the EV market, where electric models typically cost more than their gasoline counterparts. Tesla has teased the idea of a more affordable vehicle, yet no such model has materialized.
The removal of the Standard Range Model 3 coincides with strong sales figures for Tesla, which recently reported third-quarter vehicle deliveries totalling 462,890, slightly surpassing analyst expectations.
Tesla faces growing competition from Chinese firms like Xpeng, Nio, and BYD, which are introducing cheaper EV options. For instance, Xpeng’s new Mona M03 costs just $16,800, well below Tesla’s Model 3 in China. Nio and BYD are preparing to launch a new budget brand called Onvo, aiming to rival Tesla’s Model Y.
Additionally, Nio is developing a second, low-cost brand called Firefly, targeting prices under $30,000. Analysts predict over 100 new EV models will hit the Chinese market by the end of 2024, driven by government incentives for affordable EVs.
Tesla has not commented on the discontinuation of the Model 3 Standard Range or its plans for future affordable EVs.
