Upvote:10
You're fine. The agreement was that you would get car X at price Y. On arrival, they could not keep their end of the deal, so you don't have to keep your end either.
I do have to say that this is quite unusual though: most reputable car rental companies would bend over backwards and upgrade you for free if they had any cars left, instead of letting a potential customer walk away. I presume the price was literally too good to be true and they were just trying to pressure you into renting a more expensive mode.