The new “Standard” versions of the vehicles, priced well below their more premium counterparts, aim to capture a broader market in the face of rising competition from both European and Chinese manufacturers.
The move to launch these budget-friendly trims comes as Tesla grapples with declining sales in Europe. According to recent registration data, Tesla’s sales in the region dropped by 12.3% year-over-year, with an even steeper decline of 36% when excluding Norway. This has been a wake-up call for the company, pushing it to rethink its strategy and offer more affordable alternatives to consumers.
Competitive Pricing to Regain Market Share
Tesla’s new “Standard” trims for the Model 3 and Model Y are priced significantly lower than their premium counterparts, giving the brand a better chance to compete with more affordable electric vehicles (EVs). In Germany, the Model 3 Standard is priced at €36,990 ($39,240), a sharp reduction compared to the next model up, which starts at €45,970 ($49,440). Similarly, the Model Y Standard is priced at €39,990 ($42,960) in key markets like Germany, which is lower than the Premium version, reports Electrek.
Despite the lower prices, these models still boast impressive specs. The Model 3 Standard offers a range of 534 km (332 miles) on the WLTP cycle, and it can accelerate from 0 to 100 km/h (62 mph) in just 6.2 seconds. Meanwhile, the Model Y Standard offers the same range, but its pricing is closer to the Premium version, which limits its appeal. These models are clearly targeting the growing number of budget-conscious buyers in Europe who want the performance and software advantages of Tesla vehicles but at a lower cost.
De-Contenting Strategy: Fewer Features, Lower Prices
To achieve these lower prices, Tesla has made several compromises in terms of features, a strategy known as “de-contenting.” The Model 3 Standard, for example, comes with partially textile seats instead of the full vegan leather found in the Premium version. It also lacks the 8-inch rear screen, which was introduced in the Highland refresh of the Model 3, and heated rear seats have been removed.
The audio system has been downgraded to a 7-speaker setup, eliminating the subwoofer and amplifiers. Additionally, the wheels have been switched from alloy to steel with plastic aero covers, and the panoramic roof and light bars have been removed.
While these changes may seem minor, they represent a significant shift for Tesla, known for its premium features and technology. The goal is to offer a more affordable entry point into the world of electric vehicles while still maintaining the essential performance and range Tesla owners expect. However, these cost-cutting measures could alienate some buyers who value the premium experience Tesla has become known for.
Tesla’s Response to Increasing Competition in Europe
The timing of these new trims comes as Tesla faces intensifying competition in the European market, especially from companies like Volkswagen and BYD. The VW ID.3, for example, has recently seen a price reduction to around €29,760 ($31,850), making it a strong competitor to the Model 3 Standard, reports Supercar Blondie.
The BYD Atto 3, another key rival, is priced at €37,990 ($40,670), undercutting the Model 3 Standard by €1,000 ($1,070). With these price cuts, both Volkswagen and BYD are putting pressure on Tesla to adjust its pricing strategy in order to remain competitive.
The Model 3 Standard, with its impressive range and lower price, presents a more attractive option compared to the Volkswagen ID.3, offering more space and technology for a competitive price. Meanwhile, the Model Y Standard is positioned against the BYD Atto 3 and Volkswagen ID.4, with the Model Y priced similarly to these competitors but offering a larger vehicle with the Tesla advantages of software and access to its Supercharger network.
