Bloomberg: Tesla’s Model 3 will cost as little as $25,000

Tesla Model 3 PriceImage Source: Green Car Reports

The dream of an affordable electric car might finally be a reality. According to a report published by Bloomberg on Tuesday, Tesla has confirmed that the Model 3 will cost $35,000. But that’s before any tax subsidies, which could easily knock the actual price a consumer pays for the car down to a modest $25,000.

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

In order to put this price into perspective, consider the fact that Americans are willing to spend an average of $31,000 on a new car, according to an analysis by Salim Morsy of Bloomberg New Energy Finance.

The only car of a comparable size to the Model 3 with more than 100,000 annual sales and a price point of $35,000 is the BMW 3 Series.

Tax incentives vary from state to state, but anyone who buys a Model 3 will be eligible for the $7,500 federal income tax credit, bringing the price down to a maximum of $27,500. Morsy says that this credit alone would expand the market for Tesla’s next car by 50%, but more than a dozen states provide additional incentives as well, including a $6,000 credit in Colorado.

Here’s the issue: if the Model 3 doesn’t reach the market until late 2018 (which some analysts see as a likely outcome considering recent production delays), the incentives might run out before early adopters on a budget can buy one of their own.

As Bloomberg explains, the federal credit is only applied to the first 200,000 sales, and at the current rate of sales, Tesla might hit that number in mid-2018. Complicating matters further, the first Model 3 models off the assembly line will likely be Signature Series models priced at least twice as high as the base model, soaking up even more incentives.

Nevertheless, Tesla is adamant that the Model 3 will launch on time.

“The Model 3 is on time, and everyone is going to learn more about it at the end of March,” said Brooklyn. “That’s when we’ve committed to talking about it and giving a really great update, and that’s what we’re going to do.”

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