TLDR
- Tesla launched a new Model Y all-wheel-drive variant priced at $41,990, positioned between the Standard rear-wheel-drive and premium models.
- The rollout follows Tesla’s October 2025 introduction of lower-priced Model Y and Model 3 versions, which cut prices by $5,000 from previous base models.
- TSLA stock has dropped 6% year-to-date as the company reported its first annual revenue decline despite beating Q4 2025 expectations.
- China announced a ban on Tesla-style retractable door handles starting next year due to safety concerns about doors not opening during accidents.
- Wall Street maintains a Hold rating on Tesla with an average price target of $393.51, suggesting 7% downside from current levels.
Tesla unveiled a new all-wheel-drive version of its Model Y SUV, priced at $41,990, as the electric vehicle maker continues adjusting its pricing strategy to attract buyers in a cooling market. The new AWD model slots between the cheaper rear-wheel-drive Standard version and the company’s premium offerings.
NEWS: Tesla has just launched a new Model Y variant in the U.S. called the Model Y AWD for $41,990.
• 294 mile range
• 0-60mph: 4.6sTesla has also renamed the Model Y Standard to the Model Y RWD.
New U.S. Model Y lineup:
• Model Y RWD
• Model Y AWD
• Model Y Premium RWD… pic.twitter.com/ZyHpRaxPeT— Sawyer Merritt (@SawyerMerritt) February 3, 2026
The launch represents Tesla’s latest attempt to stimulate demand through expanded product options. In October 2025, the company introduced lower-priced Standard versions of both the Model Y and Model 3 sedan, cutting approximately $5,000 from previous base model prices. These Standard trims have become central to Tesla’s 2026 strategy, aimed at lowering entry prices for cost-conscious buyers.
The U.S. electric vehicle market has faced headwinds since September, when the Trump administration ended the $7,500 federal tax credit. Tesla’s Standard variants help bring prices closer to pre-incentive levels, partially offsetting the higher effective purchase costs buyers now face. In international markets, the $5,000 price reduction offers a more visible discount designed to boost demand.
Tesla stock has declined 6% in 2026. The company recently delivered better-than-expected fourth-quarter 2025 results but reported its first annual revenue decline.
Margin Pressure Concerns
Analysts have raised concerns about the impact of lower-priced vehicles on Tesla’s profit margins. The margins are already under pressure from stiff competition and weak sales volumes. Questions remain about whether Tesla can offset the impact through reduced manufacturing costs or increased revenue from software and services.
CEO Elon Musk announced last week that Tesla would end production of its Model S and Model X sedans. The company plans to use the California factory space previously dedicated to those vehicles for manufacturing Optimus humanoid robots instead.
China Implements Door Handle Ban
China’s Ministry of Industry and Information Technology announced new regulations banning hidden or retractable door handles, a design popularized by Tesla. The ban takes effect next year following growing safety concerns about doors failing to open during accidents.
The new rule requires all vehicles to have both internal and external door handles that can be opened manually. The ministry stated the regulation would “improve the level of automotive safety design.” More than half of new cars sold in China are electric or plug-in hybrids, many featuring the retractable handle design. In the U.S., Hyundai’s Ioniq also offers retractable handles alongside Tesla vehicles.
Wall Street analysts maintain a Hold consensus rating on Tesla stock. The average price target of $393.51 suggests a 7% decline from current levels as the company navigates the challenging EV market landscape.
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