By on February 6, 2019

Tesla Model 3, Image: Tesla

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:

 

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]

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58 Comments on “Almost Like a $35,000 Car…...”


  • avatar
    dukeisduke

    This sounds like Apple’s pricing on their new phones – “iPhone XR from $449. iPhone XS from $699.*” Rolling in the best case phone trade-in scenario.

  • avatar
    bunkie

    Not very different, really, from the stores with signs that say “Everything $1 and up!”

    And that, of course, is occasion to roll out my favorite quote from Proctor and Bergman (of the Firesign Theatre):

    “Send for the Channel 85 program guide, It’s free, just a dollar!”

    • 0 avatar
      ToddAtlasF1

      Conceivably, stores that have a sign saying, ‘Everything $1 and up!’ have something they can sell you for a dollar. Elon Musk is lying. That’s pretty different, assuming any words have meaning.

      • 0 avatar
        Russycle

        Yeah, I’m pulling for Tesla, but this is silly. The car costs what it costs, figuring potential savings into the “price” is BS.

        FWIW, my brother met Musk a few days ago. He was reasonably well-behaved. (Musk, that is, I make no such claims for my brother)

      • 0 avatar
        bunkie

        I should have been a bit more clear. I was really referencing the Apple iPhone pricing example for which the example works.

    • 0 avatar
      KevinC

      My all-time favorite was a store that had a massive banner out front, proclaiming “GOING OUT FOR BUSINESS SALE!!”. lol, wut?!

      GEICO is the #1 offender with its “you could save up to 15% or more on car insurance”. Same thing as the “$1 and up” schtick.

    • 0 avatar

      @ Bunkie: Or the related from Antelope Freeway:

      “Send no money, just your name and address to Dope. That’s D-O-W-P. . .”

  • avatar
    sportyaccordy

    The fuel savings part is what really gets me. What if this is my first car? Or I’m trading in my Model S? You want to root for Tesla but then they do crap like this.

    • 0 avatar
      EGSE

      One thing I dislike a lot about car buying has nothing to do with whether it’s gas or electric, it’s the smoke and mirrors marketing BS. It’s insulting as it says “We think you’re stupid enough to fall for this sham”. Musk doesn’t have to pull that game; it adds nothing to the perceived usefulness of the car and anyone with a brain larger than a pea sees through it.

      • 0 avatar
        theBrandler

        Makes you wonder how he and his marketing team really view us then. There’s an unfortunate thing that happens to overly successful people. They begin to think they are better and smarter than everyone else who isn’t as wealthy as them. Some even begin to equate one’s wealth with one’s intelligence. It’s human nature, we don’t tend to include luck and coincidence, and other environmental factors beyond our control when analyzing our own successes. He might actually think, subliminally at least, that those of us unable to afford his top models are not the brights of individuals.

    • 0 avatar

      AGreed. The gas savings should not be included in the price of the car. I have no problem Tesla making us aware of the potential gas savings. Gas savings are very much a YMMV issue, nothing to do with the purchase price of a car.

      Do Tesla add back in the wheel tax fee if you live in a state that taxes EV’s to make up for lost gas taxes?

      No I didn’t think so.

      Tesla need to quit with the funky math.

  • avatar
    2drsedanman

    Interesting article about Tesla cars from Detroit News:

    https://www.detroitnews.com/story/opinion/columnists/henry-payne/2019/02/04/tesla-duality-vexes-hot-selling-brand/2730714002/

  • avatar
    cimarron typeR

    thanks for the link there.I like the quote regarding the Tesla hoping to match “BMW chassis design and Chevy reliability”.

  • avatar
    TimK

    Tesla needs to raise $10B to $20B in capital this year — or find a merger partner/buyout deal. From what I’ve read the only value they bring to the table is some battery tech and IP related to the controls. It’s going to be an interesting year for Mr. Musk and his followers.

    • 0 avatar
      JoDa

      Some battery tech? They are just a pile of 21700 cells like something out of a model RC car. Chevy Bolt packs are far more advanced. Musk has the mind of a sociopathic child. You can put the car speakers into “fart” mode.

      • 0 avatar
        SCE to AUX

        “They are just a pile of 21700 cells like something out of a model RC car.”

        So true. Anyone can build an EV and weld those battery cells together at the rate of 2000 per minute, 24/7/365.

        GMAFB

        • 0 avatar
          mcs

          Did you see the Maxwell acquisition? Among other reasons, their technology could cut another 20% in costs from batteries. It would increase durability as well.

          https://qz.com/1541864/tesla-bought-maxwell-technologies-for-218-million-but-not-for-its-ultracapacitors/

        • 0 avatar
          JoDa

          Wow! A welding machine that runs all day! What a visionary genius!

          You don’t even understand how pathetic it is to use 21700 cells.

          • 0 avatar
            SCE to AUX

            Show me somebody else who is assembling batteries at that rate.

            Show me somebody else’s EV with superior battery performance, both short term and long term.

            Please explain how pathetic it is to use 2170 cells. The whole industry would like to hear.

  • avatar
    civicjohn

    2 price changes in less than 40 days. CapEx spending down when they need more Service Centers and buildout of SC network badly.

    The pricing will continue to fluctuate, bad for early adopters but they probably had the additional $$ under the couch.

    Because I’m physically sidelined, I still enjoy driving by the Tesla stockpile every couple of weeks and watch it grow. Truly amazing. Now, when you’re shipping cars overseas, FCF really gets stretched.

    I just can’t figure out how they can handle all of the projects they have on their plate. I don’t understand how capital is raised in China, maybe it won’t impact the corporate books here in the US.

    • 0 avatar
      SCE to AUX

      You should realize that the growing stockpile is a consequence of selling more cars.

      If Ford complied with the industry-accepted inventory of 60 days’ worth of sales, they probably have 400k vehicles sitting on dealer lots around the country.

      • 0 avatar
        mcs

        They’re also queueing up vehicles on docks in California for Europe and those ships aren’t exactly speed demons.

      • 0 avatar
        civicjohn

        @SCE, I’d believe your assessment of increasing stockpiles of cars is a direct component of selling more cars if the cars they are stockpiling are in high demand.

        Take the S/X models for example – there is no waiting list, Musk has said on 2 or more quarterly calls that they only expect to sell 100k units per year, so I don’t understand the logic of stockpiling those models. With respect to the Model 3s, literally everyone of them I see are the $55-65k version, and Musk is on record saying that they went after the high-money Model 3 deposits first.

        So I’m not really understanding how stockpiling the fully-loaded Model 3s makes much sense when they have basically taken all of those pre-orders off the table, and they have stated publicly that was exactly what they did.

  • avatar
    mor2bz

    “Costs, cost, costs.” The same mantra used by American bean counters to insure that the Japanese kicked our cheap asses. Why could he not focus on “quality,quality, quality”? This is the only thing that could distinquish Tesla from any/all other manufacturers.

    This BS statement about %35 K if one factors in fuel savings is another deterrent to the thousands of deposit holders who have put their faith in this company. With just a shred of integrity I could not imagine to what heights the stock of the outfit would soar.

    Read about the history of the Freemont plant (NUMMI). It is interesting. This plant went from being the worst in the land to being the best, on account of Toyota’s involvement in manufacturing, quality control, and use of Japanese parts. Key was their refusal to stack up cars outside with defects hidden layers deep, which would then be “fixed” by someone with no skill in all of the layers above the defect.
    This is the way Detroit had been building cars. Instead workers were ENCOURAGED to stop the line any time a problem was shown in order to have a decent car once the car rolled off the line.

    The lone exception to high quality on these cars (Vibe, Prizm) was the paint quality. The bean counters did not primer and then Ca. regulations regarding paint made for poor, no worse than poor, paint.
    Maybe Tesla should paint elsewhere.

    • 0 avatar
      SCE to AUX

      So why did NUMMI close?

      • 0 avatar
        stingray65

        GM bankruptcy was used to get out of NUMMI JV, as the slow selling Pontiac Vibe was the GM product and there was no more Pontiac. The plant wasn’t viable with only the Toyota Matrix (Vibe twin) production, and apparently not very attractive to put another Toyota model in, so Elon picked the plant up for peanuts. Without Toyota involvement the assembly quality at Fremont is back to the good old days when the plant made GM cars that shaked, rattled, and sometimes rolled with the help of the UAW.

        • 0 avatar
          BoogerROTN

          NUMMI never built the Matrix; it was built at TMMC-Cambridge (ON).

          That said, NUMMI built Vibes and Corollas. There used to be a poster on the GenVibe forum that worked there and he’d post photos; it was sort of strange to see Vibes and Corollas on the same line.

          • 0 avatar
            sirwired

            Yep, I went on the NUMMI plant tour, and at the time they made the Vibe/Corolla on one line, and the Tacoma on another.

            Always thought it was strange that they made the Vibe and Corolla, instead of the Vibe and the Matrix.

    • 0 avatar
      Asdf

      Elon Musk is incompetent, and doesn’t know the meaning of the word “quality”. If he did, he would certainly have ensured that basic things were taken care of before he launched Tesla models on the marketplace, things like the battery not taking longer to charge than filling a gas tank, and the driving range being at least on par with the range of a traditional ICE-powered car. It’s quite telling that these things haven’t been sorted out even after all this time, Tesla’s been in existence for a whopping 15 years already!

      (I kind of get why Tesla is building a plant in China, though – just like Musk, the Chinese don’t know the meaning of the word “quality”. It’s a match made in heaven, and perhaps the start of a future merger of equals.)

      • 0 avatar
        bunkie

        Please stop with the whole “fillup time” spiel. A) It has nothing to do with quality and B) No reasonable person expects instant recharging any time soon from anyone. Despite that, lots of people have found practical use for their electric vehicles despite this limitation. And, furthermore, of all the EV manufacturers, Tesla was first to provide a network of fast chargers.

        • 0 avatar
          sirwired

          Yeah, it’s quite tiresome every time he posts this. At least he’s not calling it a “defect” in need of a recall this round.

          EDIT: Okay, he *still* called it a “defect” in another comment.

          • 0 avatar
            Asdf

            What’s tiresome is to watch the years go by and notice that the DEFECT has still not been addressed, and that the vocal herd of Elon-apologists still find no fault with that after 15 years.

        • 0 avatar
          Asdf

          A brand new vehicle that has a built-in mechanism that wastes your time, is indeed lacking in quality, there’s no way to BS around that fact.

          By the way, Tesla has NOT provided a network of fast chargers, those chargers are still painfully SLOW. Besides, you really need to adjust your expectations, or at least don’t expect other people to hold the same low expectations as yourself.

        • 0 avatar
          la834

          Me, I remain aghast at the huge quality lapse that BMW has yet to fix in most of their cars or Lexus in any of theirs. I realized this when I got home last night with my gas tank almost empty, and when I started to drive off this morning it was STILL almost empty. That’s when I realized there is NO WAY to refuel a Lexus at home. A Tesla would have been fully recharged overnight right in my garage, ready for 250 miles of driving the next day without having to first stop at a gas station on the way to work. WHEN IS LEXUS GOING TO FIX THIS QUALITY DEFECT?

  • avatar
    mcs

    I like Tesla, but I hate the “fuel savings” pricing. First of all, I already have an EV, so exactly how will I save on fuel? That being said, their pricing is still clearer than the other manufacturers. The others may keep their MSRPs more stable, but the black magic and dealer games are far worse than anything Tesla has dished out.

    • 0 avatar
      SCE to AUX

      Agreed. Like you, I already have an EV, and it’s more efficient than a Tesla, so getting the Model 3 would actually increase my ‘fuel’ expenses.

      But I don’t like the pricing drama. At first it makes the company look nimble, but now it just looks like they’re calling audibles for every play.

  • avatar
    James2

    You can’t call it a “luxury” car when the Holy Grail is a $35,000 price tag. Besides, the car looks exceptionally plain and dull on the outside, more like an econobox. (Don’t know about the inside.) I’m not a fan of chrome, but the car needs more pizzazz, a fake grille might help.

    • 0 avatar
      SCE to AUX

      Beauty and the beholder…

      Personally, I think the exterior is quite attractive, but the interior is very plain.

      As for the definition of ‘luxury’, I wouldn’t know. But high 30s is Leaf territory, and the Leaf makes no claims on luxury.

  • avatar
    Asdf

    The inherently defective BEV pictured takes forever to charge instead of a reasonable five minutes like a proper ICE-powered car. Since time is money, this crappy BEV is even more expensive than what the two-bit BEV automaker claims.

    • 0 avatar
      sirwired

      FFS, can you manage to *not* post this in every article that mentions Tesla?

      It’s no more a “defect” than it is that you can’t fill your minivan with lead bricks and expect it meet the 0-60 time on the spec sheet.

      We get it. You don’t think an EV meets your needs. They don’t meet mine either. But I’m not sure what you are trying to prove through the ridiculous assertion that a Tesla is “defective” because it can’t do something that you can do with an ICE. (Certainly the reverse is also true; there are things a Tesla will do that you can’t do with an ICE.)

      • 0 avatar
        Asdf

        If Elon Musk fixes the DEFECT, then I’ll have no reason to point it out any more. However, as long as the DEFECT doesn’t go away, it’s unreasonable to expect people who point out the DEFECT to go away. So either address your complaint to Elon Musk, or STFU.

  • avatar
    stingray65

    Amazing that all automakers don’t do this. Just imagine a campaign that offers the new 2019 Corvette for $0 after factoring in fuel savings versus an 8 mpg 1974 Corvette with 454 big block. On a special offer on the new Ecosport for $0 after factoring in fuel savings versus an 6 mpg F-350 with 7.2 gasoline engine pulling a 25,000 lb trailer over the Rockies in the snow.

    • 0 avatar
      mcs

      I’d rather have the stupid fuel savings gimmick over dealing with the guessing games you have to play to figure out the price you have to pay at the traditional manufacturers. Not to mention dealing with ADM and arguing about the paint protectant the F&A guy is trying to force you to take. Yeah, the fuel savings gimmick is stupid but pales in comparison to the sh:tshow the other automakers put you through.

      • 0 avatar
        stingray65

        Most of those things you dislike are done by the dealers not the automakers. The automakers would like to have more power over the dealers, but state franchise laws do a good job of protecting the dealers from being reprimanded for customer unfriendly behavior. In contrast, Tesla is purely at fault for their fuel savings bullshit.

  • avatar
    APaGttH

    It doesn’t matter. I’ve concluded that Tesla = Apple 10 years ago.

    Elon Musk could take a crap in a box, put a Tesla logo on it, call it environmentally safe because it is all natural and compostable, and cash the check.

    Could you imagine the screams if ANY other automaker established price this way?

    If I follow this, ehem, logic, a Bolt is what, $20K, and a Leaf is what, free?

    • 0 avatar
      pragmatic

      Buddy has a Model 3. Was rear ended. Small dent in the truck lid lip, damage to the bumper cover. If it was me I’d drive it the way it was. Since the other guys insurance was paying he had Tesla fix it for $26,000. Very much like Apple 10 years ago.

  • avatar
    Art Vandelay

    While it is certainly cheaper, Charging isn’t free. My kids little Leaf noticibly impacts the electric bill. A Tesla with it’s larger battery would moreso. Also I don’t spend that much gassing up my F150, let alone the smaller vehicles.

  • avatar

    A Tesla kinda requires that you have a dedicated place to park and nearby power. This is easy if you are a suburbanite, but tough if you live in a city regardless of finances. Even if you rent a garage space at Manhattan rates you aren’t getting a Supercharger on that space…or one space (all these cars move around the garage).

    The Tesla Shorts on twitter are all over an alleged demand slump. I have no idea personally if there is one, or anything about tesla, but the shorts do things like count parking lots or repeat bad anecdotes. I’ve no position and don’t really care.

    The cheap tesla may or may not exist. The problem is once you get past the second car nice suburb or tech geek with money set, you need to survive in the real world….the person the 35k Tesla is aimed at. This isn’t nearly as comfy as the first two. I personally passed based on stories about getting parts and the cast suspension members that fail on the road. I can’t wait for parts and my driving alone is a sufficient risk factor..

  • avatar
    incautious

    with the huge hike in price at a supercharger, it can cost more to fuel up a tesla than a fuel efficient ICE

    • 0 avatar
      HotPotato

      Superchargers aren’t for routine fueling, they’re for road trips. The point of instituting a charge there was to stop the a-holes who did all their routine charging there instead of charging at home on their own dime.

  • avatar
    arthurk45

    Musk’s “fuel costs savings” are bogus in a variety of ways. Number 1 : a gallon of gas contains a significant road tax, which is not a fuel and which electric cars will have to pay, probably sooner rather than later. Gas prices are fairly consistent across the country, but electric costs vary wildly – people in California can pay 4 times more than folks in the midwest. And mileage for an electric car varies widely with the seasons – figure 40% or more worse mileage in the cold. Also, those who can’t recharge at home and have to use the Superchargers (or live in NY, HAwaii or parts of California) will pay more for fuel than any gas powered vehicle. Tesla cars also lose their current $3750 govt tax credit in just a few months,and all credits by the end of 2019. Musk is not only a conman, he is quite stupid, actually.

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