The new Model Y AWD expands entry-level choice with a new AWD option between base and premium trims.
- Tesla priced the new Model Y All-Wheel Drive at $41,990, making it the second-cheapest version of its bestselling crossover.
- The rollout supports Tesla’s shift toward simpler, lower-cost vehicles amid lineup changes.
- The launch comes as EV demand cools amid intensifying competition and margin pressure.
Shares of Tesla rose over 1% in early premarket trading on Tuesday after the EV maker expanded its U.S. Model Y lineup with a new, lower-priced all-wheel drive variant, broadening choices for consumers.
New Model Y AWD Broadens Entry-Level Options
Tesla introduced the Model Y All-Wheel Drive at a starting price of $41,990, making it the second-most affordable version of its bestselling electric crossover. The vehicle offers 294 miles of range, a 125 mph top speed, and 0-60 mph acceleration in 4.6 seconds, according to the company’s website.
The new AWD configuration sits just above the renamed Model Y Rear-Wheel Drive, priced at $39,990. With the launch, Tesla’s U.S. Model Y lineup now spans five variants, ranging from entry-level RWD to the higher-performance trim.
Tesla’s vice president of finance, Sendil Palani, said on X that the new model is designed to appeal to buyers in colder regions where all-wheel drive is often a priority. “The new Model Y AWD is the lowest-priced AWD vehicle we’ve ever sold in North America by a significant margin, despite all of its capabilities,” Palani said.
Pricing Push Comes As Tesla Reshapes Lineup
The launch follows Tesla’s broader move toward lower-priced “Standard” trims, which strip back premium features while keeping performance competitive. These offerings have become increasingly important as the EV market cools following the end of U.S. federal tax credits last year.
The new model comes days after CEO Elon Musk confirmed plans to phase out production of the Model S and Model X, freeing up factory space for Tesla’s Optimus humanoid robot. Tesla has said the Fremont facility will shift toward robotics production, with no layoffs planned.
The company also outlined plans to exceed $20 billion in capital spending as it scales production of its Cybercab robotaxi, Tesla Semi, and Optimus robot.
Tesla Drawn Into SpaceX Merger Debate
Tesla has also drawn fresh attention following the confirmed merger between SpaceX and xAI, even though the EV maker is not part of the transaction. Elon Musk has reportedly explored combining SpaceX with other ventures, including Tesla, as part of a broader restructuring of his businesses.
Gary Black, managing partner at The Future Fund, questioned the financial logic of any Tesla-SpaceX combination, saying such a deal would likely require issuing a large number of new shares, leading to significant dilution. Black added that folding SpaceX into Tesla would introduce earnings volatility tied to space and communications, an exposure he said many institutional investors may resist.
How Did Stocktwits Users React?
On Stocktwits, retail sentiment for Tesla was ‘extremely bearish’ amid ‘high’ message volume.
Tesla’s stock has risen 4% over the past 12 months.
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