Tesla's 'most affordable' EVs still cost more than $35,000. These policies may be why.

"Tesla's price point for its "more affordable" models is still higher than Elon Musk, Tesla's CEO, floated in 2020. The reasons for these sticky prices may be bigger than Tesla. On Tuesday, Tesla launched "standard" versions of the Model Y and Model 3, at $39,990 and $36,990, respectively. The "standard" models are between $5,000 and $5,500 cheaper than the flagship versions - sans Autosteer and a radio - and the market was not enthusiastic."

""What I would criticize about the US's approach to EVs is that they're making it really hard to build supply chains," Travis Fisher, director of energy and environmental policy studies at the Cato Institute, told Business Insider. Fisher pointed out that most critical minerals needed to make EV batteries are mined and processed in China. While some rare earths are exempt from tariffs, others, such as graphite, face a 93.5% duty. Additionally, batteries that are already assembled also face tariffs upon entry."

Tesla introduced "standard" Model Y and Model 3 variants priced at $39,990 and $36,990, about $5,000–$5,500 cheaper than flagship trims but without Autosteer and a radio. Market reaction was negative, with shares dipping roughly 4.4% at the close. High U.S. tariffs and trade policy complicate supply chains, because most critical battery minerals are mined and processed in China. Some inputs like graphite face a 93.5% duty and assembled batteries incur entry tariffs. China's expanded rare-earth export restrictions add further pressure, while U.S. factory costs in Fremont and Texas remain elevated due to land, labor, and permitting.

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