Tesla’s sales are plummeting, so it’s adding a cheaper all-wheel-drive Model Y in the US in a bid to drum up interest

• Tesla launches a cheaper all-wheel-drive Model Y
• The car gives up some luxuries but costs $41,990
• Cheaper models could help Tesla fend off the competition

Tesla’s sales have been taking a beating across the globe of late, with figures dipping to a near four-year low in November 2025 in the US, according to statistics from Cox Automotive, via Reuters.

The picture is even more bleak in Europe, with numbers down by as much as 88% in some regions.

While EV sales in the US have generally taken a nasty downturn, worsened by the Trump administration's cancellation of the $7,500 federal tax credit, Elon Musk's once-innovative brand has been particularly affected.

The company's total sales fell nearly 23% in 2025 compared to the previous year, despite its launch of cheaper Standard versions of the Model 3 and Model Y.

The company is now hitting back with a more affordable Model Y AWD version that it hopes will increase demand, thanks to a bump in performance at very little cost.

The $41,990 (before incentives) AWD Model Y sits just above the base-spec rear-wheel-drive Model Y, offering a 294-mile EPA range and a 0-60mph sprint time of 4.6 seconds, which is more than two seconds faster than the entry-level rear-wheel-drive variant.

Although Tesla has ditched the ‘Standard’ naming convention in its marketing materials, this new fifth addition to the line-up very much follows the same pattern as the cheapest cars in the range, eschewing the premium audio system, second-row touchscreen, and open glass roof for much more basic options.

So like its rear-wheel drive counterpart, this new car lacks the HEPA filter, touchscreen adjustable air vents, vegan leather interior, power folding seats, adaptive high beams, and frequency-dependent shock absorbers of the more expensive Premium counterparts.

The all-electric range is also slightly down in the rear-wheel-drive version, thanks to the second motor and additional performance on tap, with 321-miles playing 294-miles.

Tesla needs more affordable cars

The added benefits of having all-wheel-drive traction, as well as the additional pace for an additional $2,000, will be appealing to North American buyers – a group that is drastically lacking choice in electric vehicles due to a decision from many global automakers to not export to the tariff-riddled market.

As we have said before, the latest iterations of both the Model 3 and Model Y are the best cars Tesla has ever made, and even in the more basic ‘Standard’ trims, still represent an excellent, fuss-free introduction into the world of EVs. Especially when you consider that Tesla’s Supercharger network remains one of the simplest and most seamless ways to charge.

Tesla’s choice to offer cheaper versions of its best-sellers is clever and timely, as, despite demand for EVs in the US waning, there is a growing number of premium electrified rivals from BMW, Volvo, and Mercedes-Benz set to arrive in the coming months.

If Tesla wants to remain competitive, it needs to undercut the competition.

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