The Everyman Ride For the Upper Half

Issue 08-07-17   |   Reviewer:   Michael S. Raisinghani, Ph.D.
Disciplines:


Abstract

Tesla Inc. has characterized the Model 3 as its inroad to mass-market drivers—the base model, before options or incentives, will be roughly half the price of the company’s cheapest Model S. Having an electric car in the lineup that’s affordable for more households is pivotal to Tesla to reach the mass market.

The median car model sells for more like $24,000, almost one third less, according to Kelly Blue Book. The Model 3’s starting price is about the same as a basic version of the BMW 3 Series. A Model 3 with the average option mix will probably cost buyers about $42,000, a price that’s more in line with the $41,832 average for an entry-level luxury car, according to KBB data.

Demand for Tesla cars will increase “exponentially” as Tesla is able to drop its prices, according to CEO Elon Musk, who estimated that interest in the Model 3’s price point was 30 to 70 times higher than that of the Model S. Electric cars qualify for a $7,500 federal tax credit, though that begins to phase out once manufacturers sell 200,000 electric vehicles in the U.S.





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