Tesla has introduced more affordable versions of its popular Model Y SUV and Model 3 sedan in the US, aiming to counteract declining sales following the expiration of a crucial federal tax credit for electric vehicles. The new models are priced $5,000 lower than their predecessors, with the Model Y starting at $39,990 and the Model 3 at $36,990. However, the announcement failed to impress investors, causing Tesla’s shares to drop by approximately 4%. The company has been grappling with increased competition, sluggish innovation in affordable vehicles, and reduced government support for EVs. Earlier this year, Tesla reported a 12% decline in second-quarter sales to $22.4 billion, marking its steepest drop in over a decade. While the company recently saw a surge in EV sales, analysts attribute this to consumers rushing to purchase before the tax credit expired. Tesla’s reliance on its core car business remains critical, even as CEO Elon Musk shifts focus toward AI-driven ventures like robotaxis and humanoid robots. The stripped-down versions of the Model Y and Model 3, designed to mitigate the loss of the EV credit, lack some features found in other Tesla vehicles. The company’s latest major launch, the Cybertruck, has also underperformed, with US sales totaling around 52,000 units since its 2023 debut.