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Tesla launches Model Y rear-wheel drive in the US, its cheapest SUV

The Tesla Model Y RWD lists for $43,990, and qualifies for the full EV tax credit.

Tesla (TSLA) introduced a cheaper new version of its popular Model Y SUV just in time to address what some are calling a slowing in EV sales around the globe.

Tesla now lists on its US website the Model Y RWD (rear-wheel drive) model, which is a version of the Model Y with a single motor powering its rear axle. Tesla estimates the Model Y RWD will have 260 miles of range and cost $43,990. Prior to the RWD version, Tesla had a base Model Y AWD (all-wheel drive) that cost $47,490, or $3,500 more than this new RWD version.

The new variant will likely be powered by cheaper LFP (lithium iron phosphate) batteries, which have shorter range but longer battery life compared to NMC (nickel manganese cobalt) batteries. Tesla says the new RWD also qualifies for the full $7,500 federal EV tax credit, meaning this version could be had for as little as $36,490 if the buyers meet income requirements. Buyers' AGI (adjusted gross income) shouldn't exceed $150,000 for a single person or $300,000 for joint filers/married people.

The Tesla Model Y RWD order page (10/3/2023)
The Tesla Model Y RWD order page Oct. 3, 2023. (Tesla) (

Tesla didn't indicate where the Model Y RWD is assembled, though it is possible it will be made in Giga Austin, which currently only builds the Model Y and potentially the Cybertruck when production commences. Tesla does however make a Model Y RWD that is assembled in China, as well as at Tesla’s newer Berlin gigafactory.

The introduction of a new Model Y comes as Tesla’s global sales missed analyst expectations for the third quarter. Tesla said it delivered 435,059 vehicles globally, of which approximately 419,000 were Model Y and Model 3 vehicles and around 16,000 were higher-priced Model X and Model S cars. Wall Street consensus estimates had deliveries pegged at 456,722.

"A sequential decline in volumes was caused by planned downtimes for factory upgrades, as discussed on the most recent earnings call. Our 2023 volume target of around 1.8 million vehicles remains unchanged," Tesla said in a statement.

Looking ahead it seems Q4 will be a big one for Tesla, with the addition of the cheaper Model Y in the US, a recently refreshed Model 3 sedan in some markets, and Cybertruck deliveries expected by the end of the year. CEO Elon Musk had said a Cybertruck delivery event was coming in Q3, but that has not turned out to be the case.

Read more: Are electric cars more expensive to insure?

Pras Subramanian is a reporter for Yahoo Finance. You can follow him on Twitter and on Instagram.

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