Tesla is introducing an ultra-low-cost variant of its Model 3, targeting a price point below $25,000, to combat declining sales and regain ground in the competitive electric vehicle market. The move signals a strategic pivot to broader affordability.
- New ultra-low-cost Model 3 variant priced under $25,000
- Expected production start: Q2 2026
- 12% YoY decline in Model 3 sales in Q3 2025
- Market share in North America fell to 18.5% in 2025
- Targeted first-year sales: up to 1.2 million units
- Production to leverage existing Berlin and Shanghai Gigafactories
Tesla has announced plans to launch a new, stripped-down version of its Model 3, targeting a base price of under $25,000, according to internal product roadmaps and executive disclosures. This version will feature simplified interiors, reduced battery capacity, and the removal of premium features—such as advanced driver-assistance hardware and premium audio systems—while maintaining core drivetrain efficiency. The goal is to appeal to first-time EV buyers and price-sensitive consumers in emerging markets. The initiative follows a 12% year-over-year decline in U.S. Model 3 sales during the third quarter of 2025, according to company filings and industry tracking data. Market share in the North American EV segment fell to 18.5%, down from 24.1% in early 2024, as competitors like Ford, Rivian, and BYD expanded their affordable offerings. Tesla’s previous price cuts on the standard Model 3 and Model Y have not fully offset growing competition. The new ultra-low-cost variant is expected to enter production in Q2 2026, with initial rollout focused on North America and select Asian markets. Analysts estimate the model could capture up to 1.2 million units in its first year, assuming price stability and supply chain efficiency. It will be built at the Berlin and Shanghai Gigafactories, leveraging existing production lines with minimal retooling. Automakers and component suppliers are closely monitoring the development. Battery manufacturers like CATL and LG Energy Solution may see increased demand for smaller, lower-energy cells, while tier-1 suppliers may face margin pressure due to the reduction in hardware content. The move could also influence regulatory discussions around EV incentives, as policymakers consider eligibility thresholds for subsidies.