Tesla is taking bold steps to regain its footing in the increasingly competitive electric vehicle landscape. The company has unveiled stripped-down versions of its Model Y and Model 3, aiming to attract budget-conscious consumers and combat declining sales.

With prices dropping to just under $40,000 for the Model Y and under $35,000 for the Model 3, Tesla is clearly signaling its intent to win back market share. However, these new models come with significant compromises. The latest Model Y features a shorter 321-mile driving range, fewer audio speakers, and a basic fabric interior, ditching previous luxuries like the panoramic glass roof and second-row touchscreen.

The timing of this strategy is critical. Tesla has been struggling with sales slumps throughout the past year, partly due to controversial political stances and boycotts targeting CEO Elon Musk. Additionally, the expiration of a federal tax credit worth $7,500 for electric vehicle purchases at the end of September could further impact demand.

Competition in the affordable EV segment is fierce, with strong contenders like Ford’s Mustang Mach-E, Chevrolet’s Equinox EQ, and Hyundai’s Ioniq 5 vying for consumer attention. These alternatives offer compelling packages that challenge Tesla’s once-unrivaled market position.

The stock market’s response has been mixed. Tesla’s stock experienced a 2.5% drop, settling at $441.08, despite previous excitement generated by cryptic social media teasers about the product announcement. Investors remain cautious about the company’s ability to reverse its recent decline in sales and profits.

As the electric vehicle market continues to evolve rapidly, Tesla’s latest move represents a strategic attempt to remain relevant and competitive. Whether these more affordable models will successfully reinvigorate the brand remains to be seen.