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Tesla’s Cheapest Models Are Here and the World is Saying “Meh”

Michael Johnson by Michael Johnson
October 9, 2025
in Business & Economy
Reading Time: 9 mins read
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Table of Contents

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  • 30%: the stock price has done nothing
  • 60%: So Tesla is not a car company?
  • 90%: not enough for Europe either
  • 100%: Is Model Y or Model 3 enough for you?

Yesterday, Tesla tried to shake up everyone’s world with the advent of the lower-cost Model Y and Model 3. For months now – even years, if you go back far enough – Tesla has promised “more affordable” electric vehicles coming this year that could solve its sales woes and bring some much-needed excitement to the struggling brand.

But what we got were existing cars with a few confusing omissions from the already barren feature list. And it’s hard to find someone who encourages these beginnings.

Welcome back to Critical materialsthe one-stop shop for the biggest stories from the world of electric vehicles. Today I’m focusing on the postmortem after Tesla’s launch of its so-called reasonably priced entry-level electric cars. Whether you’re a Tesla superfan, a media pundit, a big-name investor, or just someone who passively monitors the electric vehicle industry, no one seems to be impressed with Tesla’s new models.

Let’s go, friends.

30%: the stock price has done nothing





Photo by: Tesla

For a while, it seemed like Tesla’s stock price could do no wrong. Whether it’s the Cybertruck’s lackluster sales or Musk’s several attempts to reclaim his title as the world’s richest man via some of the largest compensation deals and stock transfers in human history, the price of $TSLA has not faltered.

Still, Tesla is facing a real sales decline, particularly in Europe, where Chinese electric vehicle makers like BYD have started to make real inroads to lure customers away from their Model 3s. Whatever Tesla was about to announce, it was supposed to be good for a rapid inventory increase.

Not this time. Tesla stock closed down about 4% yesterday. This morning the stock was only up slightly, so at best the announcement was a failure as far as the stock price goes. For what? According to Barrons and noted Tesla bull Dan Ives of Wedbush, the Model Y and Model 3 simply don’t go far enough. Here is Ives:

“The long-awaited lower-cost models, which began production in North America in June 2025, are expected to hit the market in fiscal 4Q25 with an increased focus on reducing manufacturing supply chain complexities ahead of launch to ensure a smooth rollout although they are slower than initial expectations, but this price point remains relatively high compared to other vehicles in the market.

And it’s true. At one point, the Model 3 and Model Y were sort of unbeatable deals on paper in terms of range and price. When these cars were launched, not much could touch them, which is part of the reason the brand has had such a hold on the electric vehicle market.

Today, it’s not difficult to find a 300-mile range electric vehicle that matches the Model Y or Model 3 specs on paper, even for less. The Chevrolet Equinox EV and Hyundai Ioniq 5 are just two examples. Others are arriving.

Most importantly for Tesla’s stock price, however, is that investors may not be convinced that the inexpensive Model Y and Model 3 are cheap enough to attract that many customers. Consumers are in a hurry and there is a real need for really cheap cars. The brand canceling its $25,000 entry-level car won’t help it get back to its quarterly goal of 500,000 units, Ives said.

I think it’s silly to think that the Model 3 and Model Y Standard won’t bring a few new customers, but I think it’s a clear sign that Tesla’s stock price is no longer really based on its car lineup. I don’t know if this will ever happen again if Tesla fails to create a new model.

60%: So Tesla is not a car company?




Tesla Model Y 2026 standard

Photo by: Tesla

If you’ve been paying attention to the rising cost of living, you’re probably familiar with the term “Shrinkflation.” It’s when a brand repackages the same product you know and love, but changes the size or content to make it cheaper to make, without necessarily making it cheaper to buy. Same price (or more), but worse product.

Well, just like a family box of your favorite cereal that gets a little narrower this week compared to last week, the Model Y Standard seems to be a good example of the phenomenon. Yahoo Finance thinks the Model Y is not a good idea, especially in the face of what they think is a confident plan to introduce a fleet of self-driving cars and rely entirely on AI:

Of course, there is a business case for offering products at lower prices, especially now, to make up for the disappearance of the $7,500 government subsidy for electric vehicles. And with that math essentially canceling out, we’re back to a slightly less premium car for the same amount of money. Call it “car price contraction.”

But it seems odd, even worrying, to be changing technology and product lines that will soon be obsolete when you’re also announcing a world-changing event. My “Tesla is not a car company” t-shirt makes people ask a lot of questions that my shirt already answers.

The author compared the introduction of Tesla Standard models to a big tech company introducing a VCR while everyone else is creating a streaming service.

While the jury is out on whether Tesla’s AI efforts or AI as a whole are also viable or will ever be solvent, the new low-effort and slightly cynical Tesla models only further convince me that Tesla no longer sees itself as a car company. But the slow and rather sloppy introduction of the new, not-so-cheap models makes us wonder whether Tesla and Elon Musk can actually achieve their goals with AI.

I mean, it certainly wouldn’t be the first time either side has gone back on a promise.

90%: not enough for Europe either




BYD Atto2

Photo by: BYD

The U.S. electric vehicle market has had one major goal since its inception: affordability. Charging infrastructure and product concerns may also be of concern to consumers, but arguably all of that is secondary when it comes time to pay for the car. And the price of electric vehicles has fallen over time.

But Europeans currently have much more affordable electric choices. Blame it on the opening of the market to Chinese cars, the efforts of companies like Renault and Volkswagen to keep up, as well as a general preference for smaller, cheaper models.

This means that while the Model 3 and Model Y might stand out a bit in the United States, they are unlikely to do so in Europe. And if you’re Tesla, you’re looking to reverse a declining sales trend. Reuters paints a picture of the extent to which the new Standard Model 3 and Model Y won’t shake things up.

Matthias Schmidt, an analyst at Schmidt Automotive, said cheaper Teslas should “add more dynamism” from next year, but warned that the European electric vehicle market is about to become much more crowded.

AutoForecast Solutions plans to launch more than 25 new electric vehicles in Europe next year, and around a dozen more by 2027.

Fiorani predicts that the Model Y Standard could support Tesla’s European sales based on current pricing information.

But “this is not going to open up the market like a 30,000 euro vehicle would,” he said.

It’s clear that Tesla will need more than just a Model Y without an FM tuner to regain market share.

100%: Is Model Y or Model 3 enough for you?




Tesla Model Y 2026 standard

Photo by: Tesla

What analysts say the market wants is not always what you personally would want in your entry. On the one hand, I find the lack of an FM tuner and the closed window effect on the glass roof to be almost disrespectful.

Still, the general concept of an electric vehicle that’s more basic but still seems technologically advanced isn’t a bad idea. I like that the turn signal stalk is back. I don’t mind the cloth seats or the manually adjustable steering wheel column. I completely agree with the lack of a rear window in the second row of seats.

And you? Would you buy a standard Tesla? Should automakers follow this trend and release lighter versions of their cars?

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