The Model 3 is a bargain at the moment. Though an even cheaper Tesla is on the way.
While the discounted Model 3 is available now, a low-cost Tesla — often referred to as the “Model 2” — is in the works, as CEO Elon Musk said this past week.
Here And Now: Model 3
Option #1: Get a Model 3 on the cheap now.
The Model 3 is as affordable as it’s ever been right now (December 2023). Here’s why.
Select a rear-wheel drive (RWD) Model 3 and you can get the price down to about $25,000. That includes a full federal tax credit and a state rebate of $2,500.
That puts the net price below the price of a Toyota Camry Hybrid, which is not a plug-in hybrid electric vehicle (PHEV) so is not eligible for tax credits and rebates.
And the Model 3 is way below the price of Toyota Rav4 Prime (which is a PHEV), even factoring in the federal tax credit and state rebates.
It is not, however, as cheap as the 2023 Chevy Bolt, a pure EV, which starts at below $28,000 and does include the federal tax credit and state rebates.
Model 2: Musk Reviews Product Plans ‘Every Week’
Option #2: be patient and wait for the least expensive Tesla yet.
“We are working on a low-cost electric vehicle that will be made at very high volume,” Musk said in an interview this past week.
Often referred to as the “Model 2” by analysts, Musk first referenced the $25,000 car back in 2020.
And Tesla has made other references to a very high volume car — which implies a very low price — in slides at company events this year (see bottom).
The low-cost Tesla will initially be produced at the gigafactory in Austin, Texas, Musk said in the interview.
A truly affordable Tesla could do real damage to the competition, according to Sandy Munro, owner of Munro & Associates and a car industry veteran, who conducted the interview.
“They’re going to sell them all day long. And woe to those who are trying to compete with them,” Munro told me in a phone interview last month.
“It will be a people’s car that everyone can afford. Like a Volkswagen,” he said, referring to the old Volkswagen Beetle.
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