EV giant Tesla Inc (NASDAQ:TSLA) has seemingly dropped its cheapest Model 3 variant from its U.S. website, namely the rear-wheel drive (RWD) variant that started at $38,990.

What Happened: With the RWD Model 3 getting discontinued, the cheapest Model 3 variant in the U.S. is now the long-range RWD variant which starts at $42,490 and offers a range of 363 miles. This variant was introduced by the company merely a few months back in July.

The Model 3 sedan is the cheapest vehicle from Tesla. The company's best-selling vehicle- the Model Y SUV- starts at $44,990 in the U.S.

Tesla's reasons for dropping the rear wheel drive variant are not known. The company did not immediately respond to Benzinga's request for comment.

Why It Matters: The discontinued RWD variant was not eligible for a federal EV tax credit of $7,500, unlike the other three variants of the sedan. With the discontinuation of the RWD variant, all available Model 3 variants are now eligible for a federal EV tax credit.

In May, Tesla similarly dropped the rear-wheel drive version of the Model Y to replace it with a long-range rear-wheel drive version.

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