The Affordable Tesla: Choose Between a Discounted Model 3 Now or Await the Model 2

Tesla is currently offering attractive deals on the Model 3, making it a cost-effective choice. However, an even more budget-friendly Tesla, often referred to as the “Model 2,” is in development, as confirmed by CEO Elon Musk.

Here and Now: Model 3
Option #1: Acquire an economical Model 3 today.

The Model 3 is currently available at its most affordable price (December 2023). Here’s why:

1. Tesla discounts: New Model 3s in inventory are approaching prices below $36,000, occasionally dipping below $35,000.
2. A $7,500 federal tax credit (expiring at the end of this month).
3. State rebates—check out this list of states and their rebates (via Electrek).
4. An updated Model 3, known as “Highland,” is on the horizon. Tesla might be looking to clear inventory for its arrival in early 2024 in the U.S.

Opt for a rear-wheel drive (RWD) Model 3, and you can reduce the price to approximately $25,000, inclusive of the full federal tax credit and a state rebate of $2,500. This brings the net price below that of a Toyota Camry Hybrid, which, being a non-plug-in hybrid electric vehicle (PHEV), isn’t eligible for tax credits and rebates like pure EVs and PHEVs. Furthermore, the Model 3 is significantly cheaper than the Toyota Rav4 Prime (a PHEV), even when factoring in the federal tax credit and state rebates. However, it’s worth noting that it’s not as affordable as the 2023 Chevy Bolt, a pure EV starting at under $28,000, including the federal tax credit and state rebates.

- Advertisement -

Model 2: Musk Revisits Product Plans ‘Weekly’
Option #2: Exercise patience and await the most economical Tesla model yet.

Musk stated in a recent interview, “We are developing a low-cost electric vehicle that will be produced in very high quantities.” Analysts often refer to this as the “Model 2,” a concept first mentioned by Musk in 2020. Tesla has alluded to a high-volume, low-cost car in presentation slides at various company events this year.

The cost-effective Tesla will initially be manufactured at the gigafactory in Austin, Texas, according to Musk.

Sandy Munro, owner of Munro & Associates and a veteran of the automotive industry, predicts that a genuinely affordable Tesla could pose a significant threat to competitors. “They’re going to sell them all day long. And woe to those who are trying to compete with them,” Munro commented during a phone interview last month. He believes it will be a “people’s car” accessible to everyone, akin to the old Volkswagen Beetle.