Tesla launched the new, lower-priced version of its Model 3 sedan in Europe on Friday, two months after its U.S. debut. This aggressive pricing move is a critical part of CEO Elon Musk’s efforts to revive the company’s core automotive business amid a prolonged and severe downturn in demand that has seen Tesla’s global sales contract for the better part of two years.
The launch of the Model 3 Standard is a direct tactical response to the softening demand across Europe, where new registrations have fallen sharply this year, forcing Musk to pivot away from a singular focus on premium vehicles. Tesla’s European sales have been in sharp decline for most of 2025, with registrations slumping 33% in the first eight months of the year, even as the broader Electric Vehicle (EV) market expanded.
This sharp reversal has seen many buyers opt for cheaper, fresher competitor vehicles such as the Volkswagen ID.3 and the aggressively priced Chinese rival BYD’s Atto 3.
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De-Contenting for the Mass Market
The new entry-level Model 3, described by Tesla as having an “ultra-low cost of ownership,” achieves its reduced price through calculated cost-cutting, known as “de-contenting,” rather than a fully new architecture.
The Model 3 Standard is a stripped-down version that eliminates or downgrades several premium features found in higher trims, now renamed “Premium.”
| Feature Downgraded/Removed | Standard Model 3 (Europe) | Premium Model 3 (Europe) |
| Audio System | Downgraded to a 7-speaker system; no subwoofer or amplifier | Premium 15-speaker system with subwoofer |
| Interior | Textile and vegan leather seats; no heated rear seats or ventilation | Full vegan leather; heated and ventilated front seats |
| Lighting | No Ambient Lighting (only footwell and door pocket lights) | Full ambient interior lighting |
| Convenience | Manual folding side mirrors; manually adjustable steering column | Power-folding mirrors; power-adjustable steering column |
| Battery/Range | Smaller battery pack (~69.5 kWh usable capacity) | Larger pack (~80 kWh) |
Despite these omissions, the car still offers a respectable driving range above 300 miles (480 km) and is expected to begin customer deliveries in the first quarter of 2026.
Aggressive Pricing to Stop the Bleeding
The pricing is designed to immediately close the competitive gap with its rivals.
| Country | Model 3 Standard Price (Local Currency) | USD Equivalent (Approx.) |
| Germany | €37,970 | $44,299.60 |
| Norway | 330,056 NOK | $32,698 |
| Sweden | 449,990 SEK | $47,820 |
In Germany, the Model 3 Standard’s €37,970 starting price directly undercuts the widely popular Chinese-made BYD Atto 3 by a slim margin, but still faces threats from even cheaper EVs that price below €30,000. This aggressive stance follows the October launch of a lower-cost Model Y crossover, confirming Musk’s shift away from his scrapped plan for an all-new $25,000 EV in favor of building lower-priced versions of existing models.
AI Pivot vs. Near-Term Revenue
Musk has largely diverted attention from the sales weakness by emphasizing the company’s long-term pivot toward artificial intelligence (AI), specifically focusing on robotaxis and humanoid robots. However, analysts caution that the immediate financial viability of the company still rests on its core business.
While Musk has promised a future centered on AI and driverless services, these new, aggressively priced Model 3 and Model Y variants are seen as the key drivers of near-term revenue growth and vital to stemming the tide of declining global sales that have made investors uneasy.
Tesla hopes to convert millions of price-sensitive European consumers into buyers and restore momentum in a market it once decisively dominated by making calculated compromises on features.