Tesla Introduces Cheaper Model Y RWD, Potentially the Cheapest Model Y in the US
Tesla has made an update to its US website, revealing a new cheaper Model Y RWD with a starting price of $43,990. After incentives, this could make it the most affordable Model Y ever available in the US. The new model replaces the discontinued Model Y AWD, which previously held the title of the cheapest trim with a base price of $47,740.
The key difference between the new Model Y RWD and its predecessor is the drivetrain. The new model is rear-wheel drive rather than all-wheel drive, resulting in cost savings as it only requires one motor instead of two. Additionally, it appears to utilize a cheaper battery variant, specifically Tesla’s Lithium-Iron-Phosphate (LFP) battery.
LFP batteries offer affordability and durability, but have a lower energy density compared to Nickel-Manganese-Cobalt (NMC) cells commonly used in lithium-ion batteries. As a result, the range of the new Model Y is slightly reduced, with a listed range of 260 miles compared to the previous AWD model’s range of 279 miles. However, LFP batteries have the advantage of not containing cobalt, which is considered a conflict mineral.
Despite the slightly lower range, the new Model Y RWD still qualifies for the $7,500 US Federal EV Tax Credit. This means that after applying the credit, the post-credit base price of the vehicle comes down to $36,490.
The Model Y RWD also features a 0-60 mph time of 6.6 seconds, slightly slower than the previous Model Y AWD’s 5.0 seconds. Additionally, the 7-seat configuration option is not available for the new model.
Interestingly, a similar Model Y variant with LFP battery has been available in China since 2021 with a quicker 0-62 mph time of 5.9 seconds. It remains to be seen if the US variant will receive similar performance updates in the future.
Tesla has been selling the LFP Model Y in Canada since earlier this year. The $36,490 post-incentive price for the Model Y RWD in the US is likely the lowest price ever offered for the vehicle in the country. Previous attempts to offer a Standard Range Model Y at a lower price were limited by the availability of tax credits.
However, the future availability of the federal tax credit for the Model Y RWD may be uncertain. The Inflation Reduction Act mandates that batteries used for EVs eligible for the tax credit must be manufactured outside of China. Tesla’s LFP batteries are currently produced in China, which could potentially result in a loss of access to the tax credit or a reduction in the credit.
Tesla’s website indicates that deliveries for the new Model Y RWD are expected to start in October to November 2023. Customers placing orders now may experience a lead time of up to 8 weeks.
Overall, the introduction of the cheaper Model Y RWD could make Tesla’s popular electric SUV more accessible to a wider range of consumers in the US, particularly if they can take advantage of additional state or regional incentives on top of the federal tax credit.