“You will not be able to buy a better car for $35,000 or even close.” That’s what Tesla Motors CEO Elon Musk has said about his company’s latest offering, the Model 3. Starting at a proclaimed price tag of under $40,000, it offers a taste of the ubiquitous brand at half the cost of its prolific older brother, the Model S. As of May 2016, 400,000 customers have put down the $1,000 deposit to reserve their spot for the car which should be delivered in the next few years. And over 100,000 of those people pre-ordered this car before the public unveiling. These customers exhibit good faith in Tesla and Musk. But could this also be blind faith?
Technological innovation and marketing aside, Musk’s brainchild has something few other auto manufacturers have: a massive–even cult–following among the public. The Model 3 unveiling resembled one of Apple’s quarterly press conferences, albeit more rowdy. Doting Tesla admirers in the audience cheered loudly and screamed to Musk “You did it!” There is no other auto company with such a fan base, nor one that can sell its products not as cars, but as a lifestyle. In Silicon Valley, Teslas are essentially accessories that illustrate environmental awareness and an enthusiasm for the cutting-edge of consumer technology. As such, hundreds of thousands of people have lined up for the chance to be part of the elusive and exotic Tesla club, finally given the opportunity by Musk’s first car for the masses.
From what Tesla has released about it, the Model 3 does appear to be a very pleasant vehicle. It has clean, sloping lines, and a sleek front fascia close enough to the Model S to show lineage, but distant enough to create an original appearance. The interior is simplicity itself: leather wrapped front seats and rear row, cup holders and storage containers, and a ginormous touchscreen serving all the needs of the occupants placed front and center on the dashboard. Tesla claims the vehicle has a range of 215 miles, ample room for five adults, and can reach highway speeds in under six seconds. The company also touts supercharging capability and an expected top safety rating.
Herein lies the problem: much of what Tesla is bragging about isn’t very specific. Everything, from the price to acceleration times, from standard amenities to safety ratings, is estimated or expected. While Tesla will surely deliver on most of its expectations with the Model 3, it’s fascinating that so many people have put down deposits on a vehicle that is, at this point, a showroom model with a modest estimated price and well-known pedigree. That modest estimated price is in doubt too, however. Many of the exciting features available on the Model 3, such as the new autopilot function and supercharger capability, will be optional extras costing thousands. Even the acceleration time may be derived from a model with a more powerful (and expensive) battery pack and motor. Most consumers eagerly awaiting a car with all the latest gizmos presented at the unveiling would probably pay upwards of $40,000 — not the $35,000 that Musk touts.
Of course, tax incentives help lower the actual cost some more, making the Model 3 an even more compelling investment for customers hoping to save by switching to electric. On top of a $7,500 federal tax credit, the state of California offers additional rebates that differ by make and model. However, due to federal law, these credits stop after a single manufacturer produces a certain amount of electric vehicles, meaning that customers buying a Model 3 — in fact, any Tesla — after the initial pre-order rush, may have to effectively pay more from now on. Due to the popularity of the Model 3 and the expected loss of tax incentives, it may be wise for customers to consider other all-electric cars that will be ready to be driven off the lot far sooner. The Chevy Bolt will be fairly competitive to the Model 3 in terms of range and cost, and will be delivered at the end of this year. Volkswagen’s E-Golf, a capable compact hatchback, is available now and starts cheaper than the Model 3, though its mile range is disappointing in comparison.
Consumers in the electric car market today are very fortunate to have plenty of good options to choose from, in and out of the Tesla brand. It is important to note that we don’t know everything about the Model 3, as there are no detailed specifications nor accurate pricing. While it will mostly likely be a wonderful car, one should be cautious of hedging his or her bets on such an expensive investment on good faith, not good figures.