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We’ve written a couple of times about the new Tesla Model 3 Standard and Tesla Model Y Standard. However, two things stood out to me that I wanted to discuss further.
Range
I’ll start on the plus side. One big positive thing jumped out to me. Admittedly, I’ve written about this before with other new models, but it still struck me. EV range keeps rising, a lot. It is obvious in this case because the Tesla Model 3 Standard is not much different from the Tesla Model 3 Standard Range Plus that I bought in August 2019. In fact, I think most of the things being removed from the Model 3 Premium to offer the cheaper Model 3 Standard are things I don’t have on my Model 3. However, despite prices of most things going up due to inflation, one thing has clearly gone down in cost — the battery.
Whereas my 2019 Model 3 SR+ had 240 miles of range (EPA rating), the new Model 3 Standard has 321 miles of range. That’s a huge increase for a model that costs essentially the same amount, or even a bit less, and despite all the inflation we’ve seen in the last 6 years.
I’ve mostly written about this with regard to the Nissan LEAF and Tesla models since they offer a long-term comparison of the “same model.” It’s something that affects the whole EV market, of course, but it just stands out when looking at updates like this to longstanding models.
Price
On the negative side … many people were expecting, or at least hoping, that Tesla would be offering a model with a much lower price. Of course, there was the long-targeted $25,000 Tesla, but it seemed clear that project was dropped. Still, though, many had hope that Tesla would reach a low price of $30,000 or so. Personally, I didn’t really have an expectation. So much hype and speculation builds around any Tesla product or event that I just decided I’d wait and see what was announced when it was announced. Still, though, when you look at the base prices and they’re $37,000 and $40,000 … well, that’s actually a bit of a shocker.
These are close to the same prices offered on the Model 3 six years ago when I bought one and the cheapest version of the Model Y previously. If you adjust for inflation, things are going to look better, but on the other hand, are people typically making more money than they were a few years ago? Do people have more spending power?
The big thing, though, is this: many people were expecting Tesla would open up whole new markets with lower-priced models. This ain’t happening. With the $7,500 now gone, these low-priced models are actually more expensive than the normal Model 3 and Model Y were 8 days ago! And they’re much worse. They aren’t even close to $30,000.
If someone wasn’t able to buy a new Tesla last month because it was out of their price range, are these new versions really going to do the trick for them? Plus, there are numerous used Teslas on the market where you can get much more for less. Sure, there will be thousands of miles put on them already, but Teslas/EVs are supposed to last for a long time with minimal maintenance. Or if you’re set on a new car, there’s the new $30,000 Nissan LEAF.
It’s really hard to see how these new models are going to give Tesla a big boost in sales. Some people will buy them, but how many of them would have just bought the previously low-priced Model 3 and Model Y if these weren’t released, and will slight cannibalization of those models harm Tesla’s gross margin and profits?
Overall, I think it’s safe to say many people — especially Tesla fans and shareholders — have been disappointed that Tesla wasn’t able to cut costs further. This disappointing release actually busts some widespread perceptions of Tesla and hype around its benefits. And one really has to wonder if Tesla’s 4th quarter sales will even reach last year’s 4th quarter sales. We’ll see….
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