Almost Like a $35,000 Car…

Thus far in 2019, price changes at Tesla have occurred with roughly the same frequency as storm warnings in the Northeast. The electric automaker has now dialed back pricing on its Model 3 for the second time this (very young) year, and the third time in recent months, with the company’s CEO claiming the long-promised $35,000 sedan is now here — in a way.

Fancy math required.

Actually, the Model 3’s entry price has seen almost continuous alterations, the most notable being after the late-2018 introduction of a Mid Level version with 260 miles of range. It’s this vehicle which Tesla just pared back by $1,100, putting its entry price at $42,900.

But wait! There’s still a halved federal tax credit for buyers who stake their claim before July 1st, so knock another $3,750 off that sticker. Thus, $39,150 becomes the Model 3’s floor for the next four and a half months. Unfortunately, as Tesla continues the annoying habit of factoring anticipated gas savings into its pricing, we’re left with statements like this:

Model 3 starting cost now ~$35k (after ~$8k of credits & fuel savings) https://t.co/46TXqRrsdr

— Elon Musk (@elonmusk) February 6, 2019

Of course, drivers of gasoline-powered cars can also save on pump costs — by keeping a bicycle handy and ignoring the freshly purchased vehicle sitting in their driveway. It’s a weird way of calculating price, one practiced by no other player in the EV field.

Anyway, the dream of a Model 3 that actually costs $35,000 remains alive, with Musk saying during a recent earnings call that the base model should appear by summer. That means a full three-year wait for those lured in during the model’s launch in summer, 2016.

In the meantime, Tesla remains on a cost-cutting kick, purging employees in a bid to boost profitability. The newly reduced Model 3 price is a result of the company’s decision to axe its customer referral program, Tesla claims.

Studies have shown Tesla employs far more workers to build fewer vehicles than “legacy automakers,” hurting its balance sheet, and the push is on to achieve economies of scale necessary to build a cheaper Model 3 variant.

During the Q4 2018 earnings call, Bloomberg reports, Musk stated, “Getting those costs down — variable costs and fixed costs — is what allows us to lower the price and be financially sustainable and achieve our mission of environmental sustainability. We have to be absolute zealots about this, there’s no question.”

[Image: Tesla]