Tesla launches "cheaper" Model 3 and Y with significant feature cuts, alongside advanced FSD v14

Tesla Unveils "More Affordable" Model 3 and Y, Alongside New FSD v14

Tesla has officially launched what it terms "more affordable" versions of its popular Model 3 and Model Y electric vehicles. These simplified variants now represent the most budget-friendly offerings in the brand's current lineup, with base prices set at $37,000 for the Model 3 and $40,000 for the Model Y. However, this announcement arrives with a significant asterisk: the actual cost for consumers has, in effect, increased. Just last week, these same vehicles were more attainable due to a $7,500 U.S. federal tax credit for electric vehicles, a credit that has recently been rescinded. Reports suggest that this change was instigated by none other than Elon Musk himself, who actively championed the removal of the incentive. The launch of these "budget" versions was strategically delayed until after the federal tax benefit expired.

The Ghost of Model 2 and Shifting Promises

For years, the automotive world buzzed with anticipation for Tesla's new budget model, tentatively dubbed the "Model 2," which was rumored to cost around $25,000. This vehicle was poised to be Tesla's most accessible electric car, aiming to unlock the market for a significantly broader customer base. However, in a surprising turn of events, Elon Musk abruptly cancelled the project. While initially denied, the information was later confirmed by Reuters, revealing the cancellation to be true. Following this, Tesla began shifting its narrative to "more affordable models," first referencing them in its Q1 2024 earnings report. At the time, the company indicated that the release of such models was slated for the first half of 2025, with the language suggesting the creation of entirely new models rather than mere trim adjustments. The recent unveiling, however, clarifies that these "more affordable" options are, in fact, updated base trims of the existing Model 3 and Model Y. Meanwhile, the long-awaited, ultra-affordable Tesla Model 2, envisioned as a scaled-down Model Y, appears to have morphed into the self-driving Cybercab. Instead, Tesla has opted to introduce its cheapest crossover to date as the Model Y Standard.

What's Different in the "Cheaper" Model 3 and Y

The newly designated base versions are now available on Tesla's online configurator. To achieve lower price points, Tesla has removed or simplified several features. Gone are the front and rear light panels, replaced by new 18-inch wheels. The center console has been simplified, the number of audio speakers reduced, and interior ambient lighting omitted. Notably, the rear passenger screen is no longer included. Furthermore, these models feature a smaller 69 kWh battery, resulting in a diminished driving range and slower acceleration. The Model Y Standard, for instance, offers a range of 517 km compared to the 575 km of the Premium Rear-Wheel Drive version. Even the Model Y with all-wheel drive now boasts a greater range than this new standard trim. The Model Y Standard is powered by a less potent 300-horsepower motor, accelerating from 0 to 100 km/h in 6.8 seconds, a notable step back from the 5.4 seconds achieved by the rear-wheel-drive Model Y. The exterior color palette is also quite minimalist: gray is complimentary, while white incurs an additional $1,000 and black $1,500. Interestingly, the Model 3 Standard retains its glass roof, while the Model Y Standard now features a solid roof, a perplexing departure from previous iterations. Despite these reductions, Tesla has retained several key amenities, including unchanged charging port configurations, power-adjustable seats, footwell and door sill lighting, a power liftgate, and the full suite of active safety systems. The software remains consistent, supporting over-the-air updates, mobile app integration, and access to the Supercharger network, albeit with slightly reduced charging speeds due to the smaller battery. As before, customers can purchase the Full Self-Driving (Supervised) driver-assistance system separately. However, the Autosteer lane-keeping function, once a standard feature, is no longer included as base equipment.

Fewer Options, More Economy... Or Not?

Many of the "stripped-down" features are precisely those introduced in the recent Highland (Model 3) and Juniper (Model Y) updates. By removing them, Tesla has essentially reverted to the equipment levels present before these refreshes, and some features, like power-folding mirrors, are now absent even compared to the earliest Model 3 versions. Instead of a groundbreaking new model, Tesla has delivered a simplified trim level. Tesla is marketing these new versions as "more affordable," with the Model 3 Standard priced at $37,000 and the Model Y Standard at $40,000. For comparison, the "premium" versions retail for $42,500 and $45,000, respectively. However, the elimination of the federal tax credit means Tesla enthusiasts are now paying approximately $7,500 more than they would have just a week prior. Previously, a "premium" Model Y could be had for $37,490 after discounts; now, the "affordable" Standard version starts at $39,990, making it $2,500 more expensive. A similar situation applies to the Model 3: last week it was priced at $34,990, and now it's $36,990, an increase of $2,000. Consequently, Tesla is selling its most affordable models ever – on paper, at least. Without the tax incentives, the prices have actually climbed higher than they were before the "updates." Deliveries for these "cheaper" versions are not expected to commence until December 2025. Tesla has indeed delivered on its promise of "more affordable" electric vehicles, yet in practice, they are more expensive than their predecessors due to the loss of tax credits and a reduction in features. Nevertheless, these new versions might appeal to those seeking Tesla's signature design, software, and charging ecosystem at a slightly lower entry price. However, a truly "affordable" Tesla electric car appears to remain an elusive dream.

Introducing FSD v14

Concurrently with the launch of the "more affordable" Model 3 and Y, Tesla has also released its FSD v14 update. This latest iteration of Full Self-Driving (Supervised) is the culmination of development efforts on the Robotaxi program in Austin, Texas. It incorporates new functionalities, refined algorithms, and a host of interface enhancements specifically for vehicles equipped with HW4 hardware. The previous major FSD update, v13, was introduced in late 2024. Since then, despite numerous pronouncements from Elon Musk about swiftly achieving fully unsupervised autonomous driving, the company had not rolled out significant changes. The rationale provided was that the development team was intensely focused on preparing the software for autonomous taxis. Now, however, all the advancements from that program have been integrated into the consumer version of FSD. Musk had been actively hyping this update for months, projecting a September release, but the launch was postponed due to an unforeseen bug. Consequently, Tesla owners with HW4 hardware began receiving the update only this week.

Key Advancements in FSD v14

FSD v14 introduces several notable improvements. Users now have more precise control over parking destinations, with options to specify exact locations for arrival, such as a parking lot, street, driveway, garage, or curbside. The system's response to emergency vehicles has been significantly enhanced; it can now safely stop or yield to police cars, fire trucks, and ambulances. Navigation and routing algorithms have been fully integrated into the visual neural network, enabling the vehicle to dynamically reroute around road closures and utilize detours in real-time. A new "SLOTH" speed profile has been added, offering a more cautious and slower driving experience than the existing "CHILL" mode. Vehicle behavior is now more closely aligned with driver profiles, with more aggressive driving styles allowing for higher maximum speeds. Obstacle detection has been refined, with the system now more adept at identifying and more accurately avoiding stationary and dynamic obstacles like gates, road debris (tires, branches, boxes). Enhanced stability is a key feature, with new algorithms designed to improve system recovery after crashes and ensure overall operational reliability. The update also introduces new capabilities for the cameras, including automatic front camera cleaning through a focused wash field and aerodynamic optimization at high speeds. Furthermore, the system will now alert drivers to interior windshield fogging that might impair visibility, recommending a service visit for cleaning. Tesla has also revamped the user interface for a smoother experience. Engaging Autopilot can now be done with a simple tap on the screen or via the right steering wheel scroll. Speed profile and arrival options can be adjusted directly from the Autopilot visualization screen. The "Start Self-Driving" button no longer requires brake confirmation (this feature can be re-enabled in the Autopilot settings menu under > Brake Confirm). Under driver supervision, the FSD (Supervised) system can navigate nearly any route, from initiating a drive in a parking lot to arriving at a designated point, encompassing lane changes, obstacle avoidance, turns, and parking maneuvers. However, Tesla reiterates that the system does not render the vehicle fully autonomous, and drivers must remain vigilant and prepared to intervene at any moment.