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Will the Model 3 bring Tesla to the masses?
Posted on February 10, 2016 by Matt Pressman
Recently, we reported some predictions related to the upcoming design direction of the Tesla Model 3. Yesterday, we received a few more clues about Tesla's next, much-anticipated electric vehicle. According to Bloomberg Businessweek (BB)*, "Tesla has confirmed that the $35,000 price tag on the Model 3 doesn't include the significant federal and state incentives available to electric car buyers. Official confirmation from the company echoes what Musk told reporters at an auto show more than a year ago: "When I say $35,000, I'm talking about without any credits."
BB explains, "The distinction Tesla is making here between the price before and after tax subsidies is crucial; these tax incentives can knock off as much as $10,000 from the cost of purchase, drastically increasing the size of the market for the Model 3.... 'We can confirm it's $35,000 before incentives,' a Tesla spokeswoman, Khobi Brooklyn, told Bloomberg. 'We haven't changed our minds.' To understand why pricing is so important, just look at what Americans are currently willing to spend. The average new car costs about $31,000, according to an analysis by Salim Morsy of Bloomberg New Energy Finance."
Source: Salim Morsy/BNEF, Bloomberg Businessweek*
According to BB, "A $25,000 Tesla would upend the U.S. auto market. Incentives vary widely state by state, but the base incentive is a $7,500 federal income tax credit available to everyone in the country. Bringing the $35,000 sticker price of the Model 3 down by that amount would expand the potential market by roughly 50 percent, according to Morsy. Additional incentives would further knock down the price in more than a dozen states, including an additional $6,000 in Colorado and $2,500 in California, Massachusetts, and Tennessee."
BB also includes a fascinating video showing how the precedent for going mass market, selling 500,000 Model 3 vehicles, happened before with another breakthrough vehicle, the Model T. Take a look below at how Elon Musk could emulate Henry Ford in this intriguing automotive history lesson...
Source: Bloomberg Businessweek*
And, yesterday the International Business Times (IBT) forecasts that the Tesla Model 3, "is to be faster than all of its rivals... Does anyone really expect [Tesla CEO Elon] Musk not to boast about the Model 3 being the faster car in its class? It might not have the 155mph top speed of some of its rivals, but it would still use that electric motor to launch off the line more quickly than anything else."
IBT also forecasts range predictions for the Model 3: "In March 2015, Musk said that 200 miles is the minimum expectation for an electric car. More specifically, he said this figure must be 'real world' and not a case of the car only reaching 200 miles if the air conditioning is off and it is driven on a road as smooth as a snooker table. 'Anything below 200 miles isn't passing grade,' he added. 'Most people [are] looking for 20% more than that.'"
With the prospect of lower pricing, long range, and high performance, it's no wonder a larger, mass market audience could be entranced by the forthcoming Tesla Model 3. In fact, we're already seeing younger, tech-savvy influencers anticipating its upcoming launch. Check out this week's video from Marques Brownlee. A youtube "celebrity" in his own right, Brownlee boasts over 3.2 million youtube subscribers (he's often considered the CNET for a younger generation). Brownlee just placed the Tesla Model 3 in his "Top 5 Upcoming Tech for 2016" -- listen to how he describes the Tesla Model 3 (at 3 minutes and 45 seconds in)...
Source: Marques Brownlee
Unfortunately, any really substantive information related to the Model S is likely to be "under wraps" until the big reveal in late March. That said, we anticipate Tesla CEO Elon Musk will hint at a few more Model 3 clues later today when he announces Tesla Motors' fourth quarter financial results. And, we'll be sure to update you on the news as it comes in...
*Source: Bloomberg Businessweek