Tesla has introduced a new Model Y All-Wheel Drive (AWD) variant in the U.S. priced at $41,990. This new entry-level AWD model is positioned just $2,000 above the base rear-wheel-drive version, making it the most affordable all-wheel-drive vehicle Tesla has ever offered in North America.

The new configuration features a dual-motor setup that significantly improves performance with a 0–60 mph acceleration time of 4.6 seconds. As a trade-off, it has a range of 294 miles compared to the 321 miles found on the base Rear-Wheel Drive model.

This launch coincides with a branding shift where Tesla has dropped the "Standard" label, simply calling the base versions "Model Y" while reserving the "Premium" tag for higher-end trims. The move is seen as a strategic effort to boost sales and attract cost-conscious buyers in colder climates who prioritize traction, especially as Tesla faces increased competition and the expiration of federal tax credits.