When Tesla announced the Model Y, it was expected that the car would be available in several versions, including the entry-level Rear-Wheel Drive and Standard Range (just at a later point than the all-wheel-drive Long Range versions).
All the versions (LR AWD Performance, LR AWD, LR RWD and SR RWD) were initially available in the online design studio. In March 2019, Model Y SR RWD was listed as being expected to arrive in Spring 2021 at $39,000-$40,000. Then, the company updated the site and only AWD versions were listed.
Today, Elon Musk announced that there will be no Standard Range Model Y.
As for the reason, Musk said that the range would be below 250 miles EPA: "No, as range would be unacceptably low (< 250 mile EPA)".
The question is whether we are buying that explanation from the Tesla boss, as a range of below 250 miles was stated right from the beginning - at 230 miles. From March 2019:
Standard Range RWD – $39,000 (or $40,000?) (Spring 2021)
estimated EPA range – 230 miles (370 km)
0-60 mph (96.5 km/h) in 5.9 seconds
top speed of 120 mph (193 km/h)
18″ wheels (19’’ Sport Wheels for $1,500)
Maybe the Model Y Standard Range was never intended for production from the beginning, just listed as something possible to lower the base price quoted by the media.
It's not the first time when Tesla cut the entry-level models with the lowest prices and usually the lowest margins (especially important today). It's also just another sign to not count on the entry-level Cybertruck version.
By the way, Tesla has reduced prices for the All-Wheel Drive versions, and confirmed that the Model Y Long Range Rear-Wheel Drive will finally hit the market in "a few months" - probably Fall 2020.
In March 2019, LR RWD version was expected to be $4,000 below the LR AWD version, so today it should be $45,990 (+DST).
The SR RWD would be a further $8,000 cheaper so $37,990 (+DST), but it will not happen.