Automotive

Tesla shaves a little off the price of its Model 3

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Tesla’s Model 3 has garnered huge interest since it was announced in April 2016
Tesla
Tesla’s long-promised US$35,000 electric car remains somewhere down the road, but little by little the company is edging towards this kind of mass market pricing
Tesla
Tesla’s Model 3 has garnered huge interest since it was announced in April 2016
Tesla
New pricing for the Model 3 on Tesla's website 
Tesla
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Tesla's long-promised US$35,000 electric car still remains somewhere down the road, but little by little the company is edging towards this kind of mass market pricing for its increasingly popular Model 3. The company has today shaved just over $1k off the cost of its cheapest offering, meaning pricing now starts at $42,900.

Tesla's Model 3 has garnered huge interest since it was announced in April 2016 alongside a pledge to offer an electric sedan at a price point of $35,000. Though it has not yet reached that mark, it is now shipping higher-end versions of the car in numbers that are unparalleled in the EV market, with the Model 3 becoming the best-selling luxury car in the US for 2018.

Tesla offers three variants of the Model 3, with the mid-range version covering 264-mi (424 km) on each charge the cheapest of its offerings. The company introduced this with a sticker price of $45,000 last October and soon after dropped the price to $44,000 in response to a diminishing federal tax incentives for electric car buyers in the US.

Once $7,500, then reduced to $3,750 from January 1, this tax incentive will again be reduced to $1,875 in July before disappearing entirely at the end of the year. This means that Tesla's cars are essentially becoming more expensive, adding another degree of difficulty in its mission to meet the magical $35,000 mark.

New pricing for the Model 3 on Tesla's website 
Tesla

With a sticker price of $42,900, the mid-range, rear-wheel drive Model 3 now costs $39,150 inclusive of the current tax incentives. But, perhaps cheekily, Tesla likes to factor in gas savings over a six year period when presenting the pricing of electric cars on its website too, which it says brings the actual cost to $34,850. That is unsurprisingly seen as misleading by some, but CEO Elon Musk maintains it is a sound way of marketing electric cars, with this to say in response to a complaint on Twitter.

"Both prices are shown right next to each other & lower price is *actually* the real apples to apples cost vs a fuel car," he tweeted. "In fact, for many states in the US, it's way better."

He also touched on the company's progress toward actually offering a $35,000 sedan without tax credits and fuel savings, something seen as pivotal to the company's long-term plans.

"We're doing everything we can to get there," he said. "It's a super hard grind."

Source: Tesla

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2 comments
Daishi
$35,00 3 years ago is inflation adjusted to $37,300 today. The price drop closes the gap a bit. As nice as it would be to get a $7,500 incentive off the $35,00 sticker price I'm not sure if Teslas will ever get that cheap. The average sale price of an automobile in the US is $36,000 and Tesla is a premium brand closer to BMW than Toyota. The cheapest BMW Model 3 starts at $40,250 and that's the class the Tesla Model 3 is competing in. I don't think it's a good idea for Tesla to race Chevy Bolt and Nissan Leaf to the bottom in pricing with the 3 especially while they have a 60% year over year growth at their current price ranges. I think if they successfully deliver their SUV, truck, and Roadster if they need more growth they can launch a cheap econo-car meant to be more affordable than the 3. Tesla is probably better in the long run as a premium brand because it allows them to be R&D heavy to challenge status quo. It's always going to be cheaper to just be a follower.
YouAre
Right, Daishi, that's another of Elon's blunders. He should have learned from Apple how to maximize cushflow without killing the cow.