Tesla launches new Model Y AWD in US starting at $41,990

Tesla has introduced a new all-wheel-drive variant of its popular Model Y SUV in the United States, expanding its lineup as the electric-vehicle maker pushes to attract more price-sensitive buyers. 

According to Tesla’s website, the new Model Y AWD is priced at $41,990, placing it above the rear-wheel-drive “Standard” version in the company’s U.S. range.

The launch follows Tesla’s rollout of lower-priced “Standard” trims for the Model Y and Model 3 sedan in October. 

Those versions were priced roughly $5,000 below the company’s previous base models and have become a central part of Tesla’s strategy for 2026. 

Rather than waiting to introduce a new mass-market vehicle, Tesla is aiming to lower entry prices across its existing lineup to sustain demand.

In the US, the Standard variants bring vehicle prices closer to levels seen before federal incentives, helping soften the impact of higher effective purchase costs for buyers. 

In international markets, the price cuts are more visible, with reductions of about $5,000 designed to stimulate demand amid intensifying competition.

The broader EV market has cooled since the federal $7,500 tax credit ended, adding pressure on automakers already facing slowing sales growth. 

Analysts have warned that a greater reliance on lower-priced vehicles could weigh on Tesla’s profit margins unless the company offsets the impact through manufacturing efficiencies or higher revenue from software and services.

Separately, CEO Elon Musk recently said Tesla plans to end production of the Model S and Model X, freeing up factory space in California for humanoid robot manufacturing.