Tesla has dropped the down payment requirement on Model 3 Premium RWD leases to just $1,500 while maintaining the $299 monthly payment, marking the automaker’s most aggressive pricing move since the federal EV tax credit expired two months ago.

The deal represents a 63% reduction in upfront costs compared to the $3,993 down payment Tesla required earlier this year. For a vehicle delivering 363 miles of range and premium features that once cost substantially more to lease, the new terms signal how dramatically the post-subsidy EV market has shifted.

Model 3 Premium Delivers Serious Value at $299 Monthly

The Model 3 Premium RWD now leasing for $299 per month isn’t a stripped-down base model. This is the same vehicle Tesla marketed as the Long Range RWD through most of 2025, offering 363 miles of EPA-estimated range and acceleration from 0-60 mph in 4.9 seconds.

Standard equipment includes heated and ventilated front seats, a panoramic glass roof, premium audio with 17 speakers, and Tesla’s Full Self-Driving (Supervised) hardware. The rear features a touchscreen display for passengers, customizable ambient lighting throughout the cabin, and power-folding heated side mirrors.

Tesla’s Autopilot driver assistance system comes standard, providing automatic steering, acceleration, and braking within marked lanes under driver supervision.

The lease terms require $1,500 due at signing for a 36-month contract with 10,000 miles annually, plus a $695 acquisition fee and first month’s payment. That brings the total initial outlay to roughly $2,494 before taxes.

Pricing Whiplash: From $249 to $529 and Back to $299

Tesla’s Model 3 lease pricing has experienced wild swings throughout 2025 as the company adapted to shifting market conditions and the looming expiration of federal subsidies.

In February 2025, according to CarsDirect, Tesla briefly offered the Model 3 for $249 per month with $3,943 down. That deal made the electric sedan cheaper to lease than a Honda Civic.

By March, Tesla raised the monthly payment back to $299 with $3,993 down. The automaker maintained those terms through the summer as consumers rushed to purchase EVs before the September 30 tax credit expiration.

October brought sticker shock. After the tax credit disappeared, Tesla initially raised Model 3 lease prices to between $409 and $529 per month, representing increases of up to 23% as the company attempted to offset lost subsidy revenue.

Now Tesla has reversed course, dropping both the monthly payment and slashing the down payment by nearly two-thirds.

The Math Tesla Doesn’t Want You to Calculate

The current $299 monthly deal with $1,500 down works out to an effective monthly cost of approximately $340 when spreading the down payment over 36 months.

Compare that to the February offer: $249 monthly with $3,943 down produced an effective monthly cost of $359. Tesla’s current deal is actually $19 per month cheaper despite the higher advertised monthly payment.

But here’s the critical detail. When Tesla offered $299 monthly in the summer of 2025, lessees received a $7,500 federal tax credit that the leasing bank claimed and passed through as reduced payments. Tesla didn’t absorb those costs.

Without that subsidy, Tesla is now eating roughly $208 per month in reduced revenue ($7,500 divided by 36 months) compared to what the federal government was subsidizing just two months ago. The reduced down payment represents another $69 monthly loss when amortized over the lease term.

Tesla is essentially recreating the economics that existed when federal tax credits were available, but doing it with company money instead of taxpayer dollars.

Post-Subsidy Reality Hits Hard

The federal $7,500 EV tax credit for new vehicles and $4,000 credit for used EVs expired September 30, 2025, eliminated by legislation that accelerated an end date originally set for 2032.

The market impact has been severe. According to market analysis firm Omdia, October 2025 EV sales dropped 24% compared to September, falling from 98,289 units to just 74,897 units in a single month.

Tesla managed to report record third-quarter deliveries of 497,099 vehicles by capitalizing on the pre-expiry rush. But CEO Elon Musk warned of rough quarters ahead during July earnings calls, acknowledging that the tax credit elimination would make EVs effectively $7,500 more expensive for buyers.

General Motors announced layoffs of more than 3,400 workers across battery plants and EV facilities in late October. Ford halted F-150 Lightning production indefinitely. The entire industry is recalibrating for a market without the federal support that drove much of the recent EV sales growth.

Competition from Tesla’s Own Used Inventory

Tesla faces pressure not just from reduced consumer demand but from a flood of off-lease vehicles returning to market.

Nearly 1 million EVs were leased between 2022 and early 2025 under favorable terms created by a tax code loophole. Those leases qualified as commercial sales, allowing banks to claim the $7,500 credit and pass savings to consumers through reduced monthly payments.

The loophole caused EV lease rates to skyrocket from 15% of transactions in 2022 to 67% by March 2025, according to Cox Automotive. Now those leases are maturing, with 123,000 vehicles returning in 2025 alone.

A Model 3 leased for 36 months returns to market with roughly 36,000 miles and typically prices between $25,000 and $30,000. That’s 20-30% below new vehicle pricing and creates direct competition for Tesla’s new car sales.

EVXL’s Take

Tesla’s lease pricing gymnastics reveal an uncomfortable truth about the EV industry that legacy automakers and startup EV makers don’t want to acknowledge: the entire market was built on a foundation of government subsidies that disguised the real economics of electric vehicle ownership.

We’ve been tracking this story for months. When Tesla eliminated the down payment on Model Y leases just last week, we noted the company was absorbing roughly $3,000 in upfront costs plus free upgrades to maintain competitive pricing. Now we’re seeing the same strategy extend to the Model 3.

The pattern is clear: Tesla initially raised prices by up to 23% when the tax credit expired in October, discovered that consumers wouldn’t pay those rates, and has now reversed course by essentially subsidizing its own vehicles to the tune of $200+ per month per lease.

This isn’t sustainable long-term business strategy. It’s panic.

As we reported when Trump touted a vehicle loan interest deduction that replaced the tax credit, the new policy provides a fraction of the financial support the eliminated credit delivered. A loan interest deduction might save buyers $500-$1,000 annually. The tax credit provided $7,500 upfront.

Tesla’s third-quarter performance, which we analyzed in our October earnings coverage, showed record deliveries built entirely on pulled-forward demand before the subsidy expired. Q4 and 2026 will reveal whether Tesla can maintain volume without either federal subsidies or company-funded subsidies eating into margins.

The flood of returning lease vehicles we documented in our July coverage of the used EV market adds another pressure point. Why lease a new Model 3 for $299 monthly when you can buy a three-year-old one for $25,000 and own it outright?

Here’s what Tesla won’t say publicly: the $299 lease with $1,500 down is probably losing money on every transaction when accounting for the subsidies Tesla is now self-funding. The company is betting that maintaining sales volume and market share matters more than per-unit profitability right now.

That might be correct if Tesla can sustain losses long enough to force competitors out of the EV market entirely. But it’s a brutally expensive strategy when you’re already dealing with falling regulatory credit revenue, rising competition from Chinese manufacturers, and the reality that your core product just became 15-20% more expensive overnight due to policy changes.

The Model 3 lease deal is aggressive. It’s also desperate. And it confirms everything we’ve been saying about subsidy dependency in the EV market since the tax credit expiration was first proposed.

Six months from now, we’ll see whether Tesla’s bet on absorbing these costs pays off or whether the company joins the rest of the industry in scaling back EV production and refocusing on hybrid vehicles that don’t require government support to achieve market-competitive pricing.