Tesla has addressed one of the biggest complaints about the Model Y lineup by introducing a new, more affordable all-wheel-drive variant in the United States. Priced at $41,990, the new Model Y All-Wheel Drive significantly undercuts the brand’s previous AWD entry point and brings the electric crossover much closer to similarly priced rivals from Ford and Chevrolet.
The move comes just days after Tesla confirmed it is winding down the Model S and Model X, underscoring how central the Model Y has become to the company’s near-term strategy.
At the same time as launching the new trim, Tesla has simplified its naming structure. The entry-level Model Y no longer carries the “Standard” label and is now simply known as the Model Y Rear-Wheel Drive, starting at $39,990.
Slotting just above it, the new All-Wheel Drive model adds a second motor for only $2,000 more, a sharp contrast to previous pricing that placed AWD far out of reach for many buyers. This change is especially meaningful for customers in colder regions where all-wheel drive is less of a luxury and more of a necessity.
The Model Y lineup now consists of five trims. In ascending order, these include the Rear-Wheel Drive at $39,990, the new All-Wheel Drive at $41,990, the Premium Rear-Wheel Drive at $44,990, the Premium All-Wheel Drive at $48,990, and the range-topping Performance model at $57,490.
The new AWD version mirrors the base model’s pared-back specification, meaning it comes with 18-inch Aperture wheels, a limited selection of exterior colors, and a black textile interior. Like the base trim, it appears to forgo some of the premium features found on higher-end versions, such as additional interior upgrades and other comfort-focused touches.
Where the new trim really distinguishes itself is performance. Adding a second motor dramatically improves acceleration, cutting the 0–60 mph time to 4.6 seconds. That’s a substantial 2.2-second improvement over the rear-wheel-drive version, making the AWD model feel far more responsive in everyday driving.
The trade-off comes in the form of reduced range, which drops to 294 miles on a full charge compared with the base model’s 321 miles. Even so, the balance of stronger performance and all-wheel traction makes this version arguably the best value in the Model Y range.
This adjustment also strengthens the Model Y’s position against key competitors. Until now, Tesla lacked a reasonably priced AWD alternative to vehicles like the Ford Mustang Mach-E, which offers all-wheel drive from $40,795, and the Chevrolet Equinox EV AWD, which starts even lower at $38,395.
By introducing an AWD Model Y at $41,990, Tesla has effectively closed a pricing gap that had become increasingly difficult to justify as rivals expanded their offerings.
Despite Tesla’s broader shift in focus toward robotics and autonomous technology, the Model Y remains a cornerstone of the company’s business.
Around 317,800 units were sold in the U.S. last year, making it the country’s best-selling electric vehicle by a wide margin, even as competition continues to intensify. The absence of an affordable AWD option had stood out as a weakness in an otherwise comprehensive lineup, and this new trim directly addresses that issue.
Still, while reshuffling the Model Y range helps Tesla remain competitive in the short term, it may not be enough on its own. Rivals are improving quickly, and simply adding trims can only extend the lifecycle of an existing product so far.
To maintain its lead, Tesla will eventually need a truly fresh, accessible model that delivers the same kind of disruption the Model Y once did when it first entered the market.
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