The Model Y cheaper than a Model 3: how to explain this strange positioning?

By launching its Model Y propulsion at less than €50,000, Tesla surprised everyone. This model becomes the most affordable in the Tesla range, dethroning the Model 3 in passing. What can explain this confusing choice of the manufacturer?

Normally, a range of models is built with a certain pricing logic. On August 26, 2022, by launching the marketing of the entry-level Model Y, Tesla showed us that the logic was very little. And the price positioning of this new Model Y Propulsion calls out.

Tesla plays us with the numbers

With a price starting at €49,990 (before bonus of €2,000), the Tesla Model Y is €3,500 cheaper than the entry-level Model 3. In a “normal” price list, its price should have been around €55,000, or €5 to €6,000 more than Tesla’s announcements.

The Model Y Long Range and Performance are both situated a little above their equivalents in the Model 3 range. There is no apparent reason why the Model Y propulsion should not respect the same logic. Naturally, it would also have kept a similar price difference between the propulsion version and the Long Range version as for Model 3. However, there is a difference of €15,000 between the Model Y propulsion and long range, against only €9,000 gap in the Model 3 range.

A will of Elon Musk?

If we go back a few weeks, at the conference for Tesla shareholders, Elon Musk made announcements in this direction. The Model Y is, according to Elon Musk, the most profitable model in the range in 2022 and it will be the most produced next year.

Model Y next bestseller // Source: Capture live Tesla

Inevitably, by positioning the Model Y propulsion as Tesla’s new entry-level electric vehicle, it will be able to quickly reach its volume target.

In 2021, Asia was the first market to welcome the rear-wheel-drive Model Y to complement the all-wheel-drive versions (Long Autonomy and Performance). At the end of August 2022, this version of the Model Y made a remarkable entry into the European market thanks to its attractive price. Seeing this, the United States is eagerly awaiting an announcement launching the marketing for North America. If the North American market follows the same price trend, it is undeniable that the Model Y will be a hit in 2023.

A way to relieve the order book for Model 3?

If the delivery times for the Model 3 have lengthened, in the face of too much demand, the idea of ​​putting this Model Y propulsion in the spotlight seems a good way to divert attention.

It is interesting for Tesla to redirect certain customers, undecided on the model they want, to the new Model Y. Especially if Tesla has more production capacity, or in any case more production sites in the making.

If the call rate of €49,990 is used to relieve the order book of Model 3, the novelty should quickly see its price increase. Otherwise, it will confirm that Tesla’s strategy is to bet everything on its “small” electric SUV.

An anticipation of the ramp-up of the factories in Austin and Berlin

In any case, the Tesla factories in Austin and Berlin are prepared to gradually respond to a growing demand for the Model Y. Even if for the moment the first Model Ys delivered in Europe will be produced in China, this should quickly change. .

There are, however, no other production sites planned for the Tesla Model 3. This suggests that Tesla wants by all means to switch customers interested in an affordable model from Tesla to Model Y rather than to Model 3.

The Tesla Model Y in the Gigafactory 4 factory
The Tesla Model Y in the Gigafactory 4 factory // Source: Tesla

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