Renewable Revolution

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Two Bit da Vinci

Published on Jul 20, 2018

Is the $35K Tesla Model 3 a Lie?

After making our Tesla Model 3 True cost of ownership video, we were amazed at all the insightful comments. So we decided we’d take a list of all the top comments, and cover them one by one, starting with a comment we get quite a bit: “You can’t compare the Model 3 at $35,000 because you can’t get a Model 3 for $35,000!”

Clearly, this is an important topic, especially when talking about the first mass production, affordable Tesla. So the question is, is the $35,000 Model 3 a lie? Or can you actually buy one with any hope of one day seeing it on your driveway? To answer this question, let’s first look at your purchase options when considering a Tesla Model 3.

For $35,000 you get the vaunted base model in any color you want, so long as its black. Yes, any other color will cost you $1000. But before you get flashbacks of hand cranking the windows and being without A/C, you should know the base model is pretty well equipped. It comes with one-touch power windows all around, the 15” touch display which is years ahead of anything else and even wifi. The base model comes with a 50 kWh battery pack good for 220 miles of range, it’ll do 0-60 MPH in 5.6 seconds with a top speed of 130 MPH.

Now if you want to go further, you’ll have to shell out an additional $9,000 for the long-range option. This increases the battery pack from 50 to 75 kWh and increases driving range from 220 to 310 miles. And with more batteries to draw from, the 0-60 time is reduced to 5.1 seconds, and the top speed is increased to 140 MPH.

Next up is the Autopilot features. The first tier is the “Enhanced Autopilot” package which costs $5,000. On top of more ubiquitous features like forward collision mitigation, or blind spot monitoring, with this Package, your Tesla, will be able to change lanes for you, navigate freeway interchanges, and even exit and park at your destination. This upgrade includes a lot of the hardware and sensors needed for a fully autonomous car. But if you actually want your car to be fully autonomous, you’ll have to get the Enhanced Autopilot package, and then add the $3,000 Full self-driving package.

They aren’t even taking reservations yet for the base model car, and they expect wait times of 6-9 months. So is the $35,000 base model a lie, well not. But you’d better be prepared to wait until probably mid 2019 to get one. This might all seem a bit backward, delivering the promised $35,000 EV last, after all the other models, but fear not, Elon Musk knows what he’s doing.

Remember that Tesla’s software and machine learning for self-driving cars helps them on all their platforms, not just the Model 3. The same self-driving technology can apply to the Model X or the Tesla Semi, so adding it to a Model 3, doesn’t really directly cost them anything. In fact, it helps them, since they’ll have more cars on the road collecting data, to feed their algorithms, making them even better.

If we first consider that battery production is the limiting factor in the Model 3, then a $35,000 base model would need 50kWh worth of batteries and yield Tesla just $2,000 in profit or a profit of $40 / kWh of battery required. Compare that with an extended range car with premium package and autopilot, that needs 75 kWh of batteries, but yields a profit of $15,000. That’s a profit of $200 / kWh. So if batteries are the limiting factor, it makes sense that Tesla would want to make as much money as they can up front, to help further the production process. Inversely, if there was a surplus of batteries, and the production bottleneck was caused by some other part, then it would still behoove Tesla to create more extended range cars, to use as many batteries as they have for higher profits, rather than having them sit around, waiting on cars.

So if you’re a fan of Tesla, and really want that base model 3, relax, it’s coming. Elon has worked through a lot of sleepless nights, and it finally looks like Tesla is out of production hades for the Model 3. And if you’re one of the early Model 3 adopters who’s purchased a highly appointed car, well bravo, you’re quite literally keeping this one of a kind company afloat.

Tesla is sure to make headlines, and lately, it has been a mixed bag, of production targets and fake news about skipping crucial final stage safety tests.

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Thank You,

Chris & Ricky