That new Tesla probably won't be as cheap as you think
Among many other things, they discussed pricing for the forthcoming Model 3 mass-market car.
The car is going to cost $35,000, before tax credits and incentives. (Those could substantially lower the price, depending on where you live).With that price tag, the Model 3 has already been labeled Tesla's "mass-market" vehicle. It will be one-third the price of the luxurious Model S sedan and Model X SUV.
But when he spoke on Wednesday, Musk offered some clues that he isn't expecting mass-market buyers for the Model 3. At least not at first.
Instead the game plan is shaping up something like this: Tesla wants to produce a higher-volume car, but it wants this car to be truly excellent, with plenty of technology and luxury content. And for that car, buyers will pay more than $35,000.
Mass-market or mass luxury?
Musk said that the car will compete more with the BMW 3 Series and the Audi A4, rather than the Chevy Bolt, the $37,500 (also before credits and incentives) electric vehicle that will hit the market later this year.
The base versions of the BMW 3 and the Audi A4 are priced in the $35,000 ballpark, but most customers option the cars up to the point where the price is more like $40,000 to $45,000.
And Tesla tends to compare its current vehicles with others in the luxury segment. So it's fair to assume that the Model 3 too will typically sell for more with buyers opting for upgrades, and that when it's launched we'll see the more expensive trims first, with the understanding that cheaper versions will follow.
A more expensive Model 3?
A big question, of course, is whether Tesla buyers want a cheaper car.
At this juncture, Tesla has a bit of a classic brand-versus-product problem. The brand is cool and relatively luxurious, but on the product side, Tesla wants to head downmarket.
It's a strategy that BMW and Audi have also found tricky, because undermining the impression of luxury with cheaper cars can damage the brand's value.
In any case, it will be interesting to see how this all plays out and how "mass market" Tesla's newest car really proves to be. In the end, they might be more accurately described as "upper mass market."