Tesla Introduces $42K Model Y AWD Amid Model S, X Phase-Out: TSLA Finance VP Calls It 'Lowest-Priced AWD'

Tesla Inc. (NASDAQ:TSLA) has unveiled a new All-Wheel Drive variant of the Model Y in the U.S. and Puerto Rico following CEO Elon Musk's Model S and X discontinuation announcement.

Model Y AWD For $42K

The official North American handle of the automaker posted on X on Monday, sharing the announcement. Tesla said that the range starts from $41,990 with an EPA-certified range of 294 miles on a single charge. The automaker is offering a 30-day free Supervised Full Self-Driving (FSD) trial included with the purchase.

Broadly, Tesla's Model Y lineup now consists of 5 trim levels, with the Model Y range starting from $39,990 for the Rear-Wheel Drive variant, going all the way up to $57,490 for the Performance All-Wheel Drive variant.

Sendil Palani Hails The Model Y AWD

Tesla's VP of Finance, Sendil Palani, quoted the post and hailed the launch. "Growing up in Chicago, the only vehicles we considered as a family car were those with AWD," he said, adding that his statement was for several customers living in cold-weather conditions.

"The new Model Y AWD is the lowest priced AWD vehicle we've ever sold in North America by a significant margin, despite all of its capabilities," he said.

7-Seater Model Y

The automaker had previously announced the 7-seater version of the Model Y in the U.S., priced at $51,490. Tesla said that the trim would be available only in the Model Y Premium all-wheel drive guise. Tesla will charge an additional $2,500 for the trim, which will also include a new, larger 16-inch touchscreen display.

The Model Y is also available in a 6-seater layout guise in the Chinese market, dubbed the Model Y L, which has emerged as a popular offering in China. The popularity has prompted Tesla bring the SUV to the European market sometime this year after it received approval from EU authorities.

Tesla Model Y Emerges As Best-Selling EV

The Model Y was also the best-selling EV in the U.S. last year as Tesla sold over 357,528 units in 2025. However, Tesla's sales continue to decline as data showed the EV giant recorded 35,280 sales, down 20.2% YoY from last year’s 44,190 units sold during December in Europe.

Benzinga Edge Rankings show that Tesla scores well on the Momentum metric and offers a favorable price trend in the Long Term.

Price Action: Tesla surged 1.11% to $426.50 during the pre-market trading on Tuesday after it dropped to $421.81 at market close on Monday.

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