Tesla Model 3
Tesla Model 3

Elon Musk has announced yet another price drop for Tesla’s mid-range Model 3, slicing $US1,100 off the price to bring the all-electric sedan another step closer to the promised $US35,000 “mass market” benchmark.

The price cut brings the best-selling EV to $US42,900 ($A60,380) before federal tax incentives and fuel savings, which once taken into account mean the mid-range, rear wheel drive Model 3 will have a final cost of under $US35,000 ($A49,260) – and even less in some states.

The Tesla CEO and founder made the announced late Wednesday (Australian time) via Twitter:

The price drop is another in a series of reductions made by the EV maker, the last of which occurred in the new year when Tesla’s US federal tax credit was reduced by half from $US7,500 to $US3,750.

At the time, the previous price of $US46,000 ($A64,740) was cut by $US2,000 bringing the price before incentives and savings down to $US44,000 ($A61,930).

Now, Tesla has updated its website to the new pricing which shows that once the federal tax credit of $US3,750 and a fuel savings (based on 10,000 miles and a cost of $US2.85 per gallon) are applied, US drivers can buy the mid-range Model 3 for $US34,850 ($US49,049).

Mid-range Model 3 price
Source: tesla.com

In Colorado, drivers travelling an average of 12,000 miles (a conservative value that is less than the state’s average 13,443 annual miles) and accessing the state’s $US5,000 incentive can essentially buy the mid-range Model 3 for under $US30,000 ($A42,220).

Colorado model 3 price
Source: tesla.com

The incremental reductions in price are the result of a war Tesla’s team is waging on bringing costs down.

Speaking at Tesla’s Q4 2018 earnings call last week, the CEO said that, “We’re reducing our costs while making nuanced improvements to the Model 3. The price is getting better by slight degrees…in hundreds of small ways.”

“Getting those costs down…is what allows us to lower price and become financially sustainable and achieve goal of environmental sustainability,” Musk said.

These things take time, as pointed out by one follower on Twitter – to which Musk responded, “We’re doing everything we can to get there. It’s a super hard grind.”

Questioned by another follower as to how this would affect European prices – the first shipment of Model 3s having just arrived in Europe as of Tuesday – Musk responded that VAT and import duties would result in a 30% higher price.

While Musk did not unfortunately respond to requests about what this means for Australia, if we go back to Shoolman’s formula as published in Renew Economy, the expected price for the mid-range Model 3 might now be:

Model 3 Mid-Range = $42,900 USD Price / $0.6456 = $66,449 AUD

That’s if it makes it here – if Europe is anything to go by, it will still be dual motor long-range and performance versions that will come to Australian shores first.

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