The Tesla Model 3 and Model Y share the same powertrain options, similar pricing, and near-identical software. The Model 3 starts at $36,990; the base Model Y is $3,000 more. Opt for the premium variants and the monthly difference on a 60-month loan works out to $42. For that money, the Model Y adds six inches of rear knee room, eight more cubic feet of cargo space with the seats up, 72 cubic feet when folded flat, a frunk with a drain plug, a tow hitch option the Model 3 simply cannot have, and over an inch of additional ground clearance. This comparison from someone who owns both cars isn't particularly close.
The range trade-off between the two is essentially zero. The Model 3 rear-wheel drive Premium gets 363 miles; the Model Y rear-wheel drive Premium gets 357 miles. Six miles. Beyond range, the practical differences compound quickly. The Model 3 Performance sits 5.4 inches off the ground; the Model Y Premium at 6.6 inches. That gap is visible when pulling over a kerb: the Model Y clears a standard city curb cleanly, while the Model 3 Performance would bottom its front diffuser at the same spot. For families hauling camping gear, sports equipment, or anything that needs to load flat, the hatchback opening on the Model Y is a different category of vehicle. The Model S also offers a hatchback opening, which gets overlooked, but the Model 3's sedan trunk is sealed off by rear audio components and has no through-load capability. Tesla doesn't even publish a tow rating for the Model 3; the Model Y supports towing.
Where the Model 3 holds a real advantage is in driving feel. Sitting lower with less suspension travel and no torque steer from a front motor, the rear-wheel drive variants in particular have a cleaner, more connected steering response. The Performance model is genuinely fast and feels more alert in corners than the Model Y. The front seats in the Model 3 offer one additional inch of legroom; the steering wheel also tends to sit a little higher relative to the driver, which some find intrusive. In the back, the contrast is stark: the Model Y rear seat offers foot clearance under the front seats, motorised adjustment accessible from the back row, and reclining seat backs. The Model 3's rear seat is tighter in every dimension, with no power adjustment from the back.
Bottom line: If driving dynamics are what you're buying a Tesla for, the Model 3 makes a genuine case, especially in rear-wheel drive or Performance trim. For almost everyone else, the Model Y is the obvious choice. More cargo room, more ground clearance, towing capability, meaningfully more rear space, and for $42 more per month. The six miles of range you give up is not a real trade-off.