Don’t bank on the Model 3 staying affordable for long.
The entire reason that Tesla has seen its valuation rise as if were one of the world’s largest automakers despite having a fraction of the market that Ford, GM, or Toyota do is the Model 3. Or more specifically, how cheap Tesla plans on making it. Without expensive options (not like there will be many options anyways), the Model 3 is expected to come in at $35,000, right around the average transaction price for a new car sold in the US.
Factor in the $7,500 incentive that the government gives EV buyers and the price drops down to $27,000, further enticing drivers on the fence about upgrading to electric. The problem, as The Drive so kindly points out, is that the incentives won’t last much longer for Tesla. The US government currently allots the electric car incentive, intended to help convince drivers to buy electric cars, for the first 200,000 units sold per automaker, and Tesla appears to be on track to hit that ceiling quickly. It could even happen right as the first Model 3s are rolling off the assembly line as Tesla has already sold 76,000 cars in 2016. Given how many preorders are in for the Model 3, it’s a certainty not everyone will qualify for the discount.
This could be a problem for Tesla, but that’s no likely to happen. At worst, it’ll sway some buyers away from the Model 3, but it’s not like those dead set on buying an electric car have many other options. The Chevrolet Bolt is an enticing alternative, but it already starts at $37,495 before the government incentive and drops as low as $29,995 after it’s applied. Right off the bat, it’s the more expensive option, but if the Model 3 is as bit a hit as everyone is expecting it to be, the Bolt won’t stand a chance at surviving, even if it has its sales numbers pushed forwards courtesy go the US government. Besides, Tesla and Chevy may want to go ahead and get rid of every EV possible before the Trump administration axes the incentive program altogether.