Tesla has launched a new all-wheel-drive (AWD) version of its best-selling Model Y SUV in the United States, with a starting price of $41,990, according to information published on the company’s website on Monday.
The newly introduced AWD variant is positioned above the more affordable rear-wheel-drive “Standard” version, expanding the Model Y lineup for U.S. buyers.
The release follows Tesla’s rollout in October of lower-priced “Standard” trims for both the Model Y and the Model 3 sedan. These models were priced roughly $5,000 below the previous base versions and have become a central pillar of Tesla’s strategy heading into 2026. The goal is to lower entry prices and attract more budget-conscious consumers without waiting for the launch of a new mass-market vehicle.
In the United States, the pricing of Tesla’s “Standard” variants brings vehicle costs closer to levels seen before federal incentives, helping offset higher effective purchase prices for buyers.
In other international markets, the same trims have delivered price cuts of around $5,000, a more noticeable reduction aimed at stimulating demand as competition in the electric vehicle sector intensifies.
The broader EV market has shown signs of cooling since September, after the Trump administration ended the $7,500 federal electric vehicle tax credit. At the same time, Tesla continues to face growing competition from both established automakers and newer EV-focused rivals worldwide.
Analysts have cautioned that a rising share of lower-priced vehicles could weigh on profit margins unless Tesla manages to offset the impact through lower manufacturing costs or increased revenue from software and services.
Separately, Tesla CEO Elon Musk said last week that the company plans to end production of the Model S and Model X vehicles, repurposing space at its California factory to support the production of humanoid robots.
