Well, it’s official. The Tesla Model 3 will be priced at $35,000 to start and, with government tax incentives, could get down to as low as $25,000. Much of these incentives vary by state, with Colorado giving an additional $6,000 and California giving $2,500 , but the federal incentive across the board will be $7,500. So, while the $35,000 starting price is already pretty low, it could get even lower, which would put the Model 3 in prime 3 Series-fighting territory.
Now, there are now official specs or information of any kind, other than price, about the Model 3. According to Tesla, more information will be coming out in March and will give us quite a good look as to what the Model 3 will be like. Tesla also says that, unlike the Model X SUV, the Model 3 is on schedule and will be available to customers on time. But Tesla does have a bit of an issue with the Model 3 and it’s exactly what Tesla is boasting as its greatest strength. It’s price.
The $35,000 price range for the Tesla Model 3 is very good and competitive with BMW’s 3 Series. But, without knowing what sort of specs, power, range, equipment or luxury, we can’t actually claim that it’s a good deal. If we assume that it will just be a smaller Model S for that money, then great. But you know what happens when we assume. But we don’t know what it’s going to be like yet and we don’t know what kind of range it will have. But, for the sake of argument, let’s say it has a 200 mile-plus range, just like the Model S, and it starts at $35,000 for a well equipped car. It still has an issue.
See, those government incentives that knock the Model 3 into the mid-to-high $20,000 range don’t last forever. In fact, they only last for the first 200,000 EVs sold for each manufacturer. Tesla is almost already at that number and should reach it before the Model 3’s release, especially if it’s late, which it’s likely to be, as Tesla’s track record for punctuality isn’t very good. In fact, it’s horrid, as Tesla has yet to release a car even close to on time. So if the Model 3 gets delayed, it will almost certainly miss out on the government tax incentives that make it so attractive.
However, even if it does miss out on those incentives, $35,000 is still a great price for such a good EV right? Yes, it’s excellent now but maybe not when it finally debuts. See, General Motors is currently in the process of releasing its Chevy Bolt EV that boasts a 200-plus mile range also and the Bolt is set to start at $30,000 before any incentives. Seeing as GM hasn’t sold nearly as many EVs as Tesla has, GM’s incentives are likely to last longer, bringing the Bolt’s already cheaper price tag even further down. So the Model 3 is going to have to be one helluva EV to compete with that kind of pricing. Especially with GM’s broader dealer network, far superior availability, better warranty system and superior reliability for a car that’s supposed to be quite good. Plus, with the Model 3 in the price range of the BMW 3 Series, America’s favorite luxury car, it’s going to have some incredibly steep competition, especially with the BMW 330e on its way.
Now we’re not saying that the Model 3 will be a disaster or even a bad car. In fact, we’re quite anxious to see what it’s going to be. However, we are saying that it’s price tag, that Tesla is boasting so proudly, might not be the feather in its cap that it thinks it is. Tesla is going to have to deliver big with the Model 3 or it’s going to have the same disappointing launch as the Model X and that’s something Tesla cannot afford to have happen. It’s stock has already fallen dramatically with the terrible launch of the Model X that has most customers complaining, if they even have their car yet. So the Model 3 needs to be Tesla’s savior and its competition is already in a good position to make that very difficult.