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Tesla confirms mass-market Model 3 could cost as little as $25,000 in US

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California electric vehicle maker Tesla has confirmed that its latest auto offering – the mass-market targeted Model 3 – could cost as little as $US25,000 once US tax credits are factored into the price.

Tesla, best known for its high-end prestige electric vehicles, the Model S, said last September – and CEO Elon Musk confirmed on Twitter – that the cost of the Tesla Model 3 would be $US35,000 when it was unveiled in March this year and opened up for peer-orders.


But the carmaker has since clarified that $35,000 price tag doesn’t include the significant federal and state incentives available to electric car buyers, which would likely take the cost closer to $US25,000.

“We can confirm it’s $35,000 before incentives,” a Tesla spokeswoman, Khobi Brooklyn, told Bloomberg. “We haven’t changed our minds.”

What this might mean for the Australian market is not yet clear, but as Bloomberg points out, for US consumers this is a crucial distinction – considering America’s federal and state tax incentives combined “can knock off as much as $10,000 from the cost of purchase, drastically increasing the size of the market for the Model 3.”

Indeed, according to Bloomberg’s Tom Randall, “a $25,000 Tesla would upend the US auto market.”

The base incentive is a $US7,500 federal income tax credit available to everyone in the country, Bloomberg notes – an amount that would expand the potential market by roughly 50 percent, according to analysts.

Additional state incentives would knock the price down further in more than a dozen states, including an additional $6,000 in Colorado and $2,500 in California, Massachusetts, and Tennessee. The only limiting factor for Tesla sales in this price range, says Bloomberg, would be the company’s ability to meet demand.

On that front, Musk also Tweeted in September that the company would start production of the Model 3 “in about 2 years. Fully operational Gigafactory needed.” So prospective buyers have plenty of time to save up.  

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  • Miles Harding

    Plenty of time to save up – just as well with the exhcange rate and total lack of local incentives, making the drive-away price in AUS nearer to $55K.

  • trackdaze

    I dont tink incentives will survive once a volume seller lobs into the market.

    Job done. They will say

    • Lachlan Ennis

      I read somewhere that the incentives are good until 200,000 units. So they were saying that they might hit 200,000 by 2018 with the Model S/X.

      Currently Australia doesn’t have any incentives that I could find. Other than the ACT, which exempts you from stamp duty. There is also the federal luxury car tax, which is exempt below 75,000 for fuel efficient cars.

  • onesecond

    Who knows if the incentives will be still in place in the end of 2017. But if the Model 3 is compelling, the price of 35 k $ will be appealing enough.

  • Darrell Anthony

    It bothers me that the tax dollars of the poor are paying for a car being bought by the rich.

    • Good point. We are waiting for companies and government to buy electric cars so that we can get the second hand ones.

    • Bob Nickson

      It is a tax credit. The tax dollars of the poor aren’t involved in any way. The purchaser gets to take the credit from their own tax liability.

  • Ian

    In a Tesla two-years (i.e. closer to three) GM will have already had a cheap, long range EV on the market for two years. But good luck to all these EV pioneers. The revolution is coming!

  • I have always thought that the game changer is a lower priced car. The real market for electric cars at the moment is the urban cycle car where we do a lot of short distance driving like driving to work and taking the kids to school. This is also where the pollution from petrol does the most damage.