Tesla launches cheapest car model in US: Will the new strategy boost sales amid growth challenges
Tesla launches cheapest car model in US: Will the new strategy boost sales amid growth challenges Elon Musk's owned automotive firm, Tesla has just introduced a new variant of Model Y in the U.S.The electric vehicle manufacturing company announced a new "all-wheel drive" variant of Model Y on Tesla's official website on Monday, February 2, 2026.What is Tesla's new pricing strategy?
Tesla has planned major price cuts for its 2026 strategy.The cheap-priced cars are a key part of Tesla's 2026 strategy, lowering entry prices to attract more cost-conscious buyers without waiting for a new mass-market vehicle.The new AWD model sits above the cheaper rear-wheel-drive "Standard" version of its bestselling Model Y SUV and it is priced at $41,990.Its launch follows Tesla's October rollout of lower-priced Standard versions of the "Model Y" and "Model 3 sedan," priced about $5,000 below the previous base models. Tesla's "Standard" variants in the U.S. bring prices closer to pre-federal incentive levels, helping offset higher effective purchase costs.In other markets, the price cuts, roughly $5,000, are a more visible reduction aimed at boosting demand amid heightened competition.The broader electrical vehicle EV market has also cooled since September 2025, when the Trump administration ended the $7,500 federal tax credits and meanwhile, Tesla has faced intensifying global competition.Market review:While Tesla introduces new lower price strategy for 2026 to strengthen its position in the market, experts have a different point of view regarding that approach.Tesla has faced many challenges with declining revenue growth and profitability metrics but remains active in the market with new product launches and ambitious plans.Analysts have mixed sentiments, reflecting cautious optimism amid substantial insider transactions.Tesla's revenue growth has sharply declined to -2.93% in Q4 2025, indicating a slowdown in business expansion.Insider Transactions: Tesla insiders executed 23 transactions, including 22 stock sales totaling $26.7 million and 1 stock award for 520,021 optionsMoreover, Tesla also faced profitability challenges as gross margin has dropped to 18.03% and operating margin to 4.59%, reflecting challenges in managing operational expenses.Market experts and analysts have warned that a greater share of lower-priced vehicles could keep pressure on margins unless the EV company can offset the impact through reduced manufacturing costs or stronger revenue from software and services.Why Tesla discontinue previous models?
Elon Musk announced last week that Tesla's Model X and Model S, the company's highest-priced cars, will get discontinued.Tesla's CEO informed that the carmaker would end production for its Model S and Model X sedans and instead use the space in its California factory to make humanoid robots.The decision came after Tesla have seen big drops in sales in recent years, making up only a tiny share of total deliveries compared with Model 3 and Model Y.Additionally, Tesla is moving beyond traditional car manufacturing toward autonomous vehicles and discontinuing older premium models lets Tesla free up factory space and resources for new projects.Experts weigh if the new strategy accelerates Tesla's growth in EV industry.
