Tesla Model 3 Mid Range misses $35,000 target by $9,000 even after price cut


Tesla Model 3 bought [Photo by reader AH]

Tesla Model 3 bought [Photo by reader AH]

To offset lower tax credits for its cars that started New Year's Day, Tesla dropped prices by $2,000 for every model on Wednesday. That doesn't quite make up for the $3,750 drop in federal tax credits, and it still doesn't get the company to its stated goal of selling the Model 3 for as low as $35,000.

According to independent delivery reports, Tesla actually added slightly to its stockpiled inventory of Model 3s in December, despite overlapping efforts to bring buyers in. That's led some observers to speculate that all the remaining customers in Tesla's order books are waiting to buy Standard Range Model 3s, which CEO Elon Musk has said since the car's conception will cost $35,000.

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So far Tesla has never built a $35,000 Model 3. Musk has said the company needs "5 to 6 months" of full production of more expensive versions of the car to rebuild its tattered finances before it can begin selling Model 3s for that little. 

Following Wednesday's $2,000 price drop, the cheapest Model 3 buyers can get costs $45,200, including a typical $1,200 destination charge.

If buyers earn the full $3,750 federal tax credit on the car (and don't qualify for any other state or local credits), they can bring home a base Mid Range Model 3 for an effective cost of $41,450—getting closer to the mythical $35,000 Tesla, but still a ways off.

READ MORE: Lower-cost Tesla Model 3: Does 260 miles, $46K before incentives split the difference? [Updated]

When he first introduced the car in 2015, Musk said the Model 3 would cost $35,000 before accounting for any tax credits—or, apparently, Tesla's usual practice on its pricing estimates of subtracting theoretical gas savings from the purchase price. As with other automakers, though, the $35,000 target price would not reflect the $1,200 delivery charge, so realistically, those buyers will pay at least $36.200.

All-in, the new price is still $9,000 more expensive than the car thousands of drivers are still waiting for.

Tesla introduced the cheaper Mid Range Model 3 in October in an effort to bring down prices for those buyers waiting for base Model 3s, then raised its price by $1,000 a few days later.

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All Model 3s produced so far also come with the Premium interior, including heated, 12-way power leather seats, GPS navigation, and a tinted glass roof. These features are expected to be deleted on the base $35,000 car, along with it having a shorter, 220-mile battery pack.

When the surprise 260-mile Mid Range Model 3 was introduced, Musk said it was cheaper alternative for the company to engineering the whole small battery for the $35,000 Model 3. The Mid Range uses the same pack architecture as the Long Range Model 3 without all its cells.

The lower federal tax credit may not be a big drag on Model 3 sales, as the company has just begun sales in Europe, where the car has not been sold before.

 
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