Tesla Unveiled the Model 3 — And It Won’t Be $35,000
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Tesla Unveiled the Model 3 — And It Won’t Be $35,000


Jennifer Lee

After ten years of waiting, Tesla unveiled its Model 3 last evening at the company’s design facility in Hawthorne, California.

Tesla CEO Elon Musk expects the car to deliver at least an EPA rating of 215 miles per charge, and — perhaps his boldest claim of the night — that the base price of the Model 3 would begin at just $35,000. This is the most important claim for Tesla to meet — and one that may just be a fable.

Musk emphasized the Model 3’s mass-market appeal and chose to focus on the car’s standard features; he did not mention any optional features during the unveiling — and for good reason. Tesla’s popular autopilot hardware and supercharging capabilities will come standard in every Model 3, underscoring the company’s vision of freedom. The car is also expected to go from 0-60 mph in less than six seconds, and will be one of the safest cars in the world with “five stars” in all categories, all-around.

“Even if you buy [the Model 3] with no options at all, this will still be an amazing car,” Musk said. “You will not be able to buy a better car for $35,000, even with no options.”

But this attractive $35,000 price point is likely to change when 2017 approaches. Tesla’s price is based on a $7,500 federal tax credit, according to Wired. The $7,500 discount helps subsidize the cost of expensive technology for new automakers. All auto companies that sell electric cars rely on tax credits, including General Motors and Nissan, to keep the Chevrolet Bolt and the Nissan Leaf below $30,000 — a number that consumers find more reasonable.

This federal tax credit, however, won’t last forever. And it certainly won’t last by the end of 2017. The tax credit applies to the first 200,000 electric vehicles a manufacturer sells in the United States. Once an automaker exceeds that number, the credit phases out incrementally over the following 12 months. And as Tesla continues to sell the Model S and the Model X, they come closer and closer to this number.

Once the Model 3 is released at the end of 2017, the federal tax credit would be gone.

Making the $35,000 base price highly unlikely.

Musk is “fairly confident” that Model 3 deliveries will begin by the end of 2017. And since last night, reservations for the Model 3 have topped over 115,000. Regardless of its multiple $1,000 reservations, the Model 3 will only be able to revolutionize how the world drives if its base price point does not budge. If higher, it could jeopardize Tesla’s vision of a mass-market electric car.

Electric cars may not be for everyone.

Sources:
Wired, The Verge, The Verge: Tesla Model 3 Announced

 

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