Tesla cuts prices on Model 3 and Model Y trims as tax credit ends

Tesla unveiled lower-priced versions of its Model 3 sedan and Model Y sport utility vehicle on Tuesday, offering entry prices of $36,990 and $39,990 respectively, in an effort to shore up demand as federal tax incentives end and competition intensifies. The company said the new “Standard” trims will be available later this year and are positioned below previous premium configurations by roughly $5,000.

The two models share a 69 kilowatt-hour battery and an EPA estimated range of 321 miles. To hit the lower prices, Tesla pared back equipment and software. Both cars are rear-wheel drive only, omit Autosteer and Autopilot driver-assistance packages, and come with a reduced audio system, textile interiors, manual adjustments for some controls and no second-row touchscreen. The Model Y loses the panoramic glass roof in favor of an insulated fabric headliner. Tesla says both vehicles support fast charging at up to 225 kilowatts, which the company estimates can add roughly 160 to 170 miles of range in about 15 minutes.

Investors reacted sharply to the announcement, with the company’s shares dropping about 4 to 4.5 percent in trading after the news. Analysts said the trims were a modest...