In the heart of California, the Tesla Model 3 may be more affordable than the average sedan. An entry-level Tesla Model 3, tagged at $40,240, may now be acquired by Californians for a steal, thanks to a stack of state and federal incentives, slashing the price by more than 35%.
A combination of incentives and Tesla’s recent price reductions could potentially plummet the cost of a Model 3 to a mere $25,240. This price point, as highlighted by Reuters, undercuts the cost of a Toyota Camry which begins at $26,320. This development gives Californians a chance to own an electric vehicle (EV) at a price lower than a conventional combustion engine car.
In the past, due to rules about the geographical origin of an EV’s battery and components, some Model 3 variants could only leverage half of the full $7,500 federal tax credits. However, Tesla has swiftly reacted to this legislation. It announced that all Model 3 versions now qualify for the full credit, though the specific technical alterations responsible remain undisclosed.
Caspar Rawles, an analyst at Benchmark Mineral Intelligence (BMI), suggested to Reuters that Tesla might have replaced the base car’s CATL battery with a higher-costing alternative from Panasonic or LG. He stated, “It is highly likely it is Panasonic but there may be some concerns around cell availability if they need to supply enough for all U.S. Model 3s.” Even though these batteries cost more, their adoption could be justified by the full tax credit eligibility.
The promise of a $25k Model 3 is bound to lure many potential EV buyers into Tesla’s Californian showrooms. Still, with the anticipation of an upgraded version of the six-year-old sedan later this year, some may choose to hold off and see what Tesla unveils in the second half of 2023. Nonetheless, the offer of a competitively priced EV is certainly reshaping the market.