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The basic Tesla Model 3 has a standard battery, a 220-mile range, and no options. At $35,000, it is a car for the masses.
Hearing $35,000, most of us saw what they meant. The price told us all we needed to know.
Tesla’s Cars
Like the General Motors of the 1920s, Elon Musk has said he wants a car for every pocketbook. But his Tesla was always a luxury car. Averaging a $75,000+ sticker, it was in a class with top-of-the-line BMW, Mercedes, Porsche, and other luxury vehicles.
So, when Musk priced the Model 3 at $35,000, a reservations list with 400,000 names (plus a $1000 deposit) confirmed that the price was right. Even at $44,000, the July Model 3 deliveries (with longer range battery packs and a faster charge) were not in the stratosphere.
You can see that current production estimates are not close to the size of the wait list:
Also, the price might not be. In this Tweet, Musk pushes $78K version of the $35K car:
Here’s why:
Or, as a Bloomberg analyst commented: “A Model 3 with a $35,000 price will be the rarest of the rare,..Perhaps the second most collectible Tesla ever, behind the one floating around in space.”
Our Bottom Line: Price
Imagine for a moment a T-shirt. If I said the price was $10, you would know a lot about it.
In the former Soviet Union, your response would have been quite different. Established by a committee, the price was just a number that coordinated with other pre-ordained amounts for wages, capital, and land. As an amount that someone chose, it conveyed no information.
In a market system, price has a function. A high price can encourage the supply side to make more because of the profits that accompany it. Targeting a lower price, other producers (like Henry Ford) could become more efficient. Meanwhile, consumers use prices to judge whether a good or a service is a luxury.
And that returns us to Tesla. Hearing $35,000, the message was loud and clear. On the demand side, $35,000 said that Tesla no longer had to be a luxury vehicle. To Tesla though, the same number signaled a loss and maybe the incentive to stop production.
Price is the boss. It helps all of us make some decisions.
My sources and more: Bloomberg has done a good job of providing a Tesla “tracker” and the current situation.
Please note that our featured image is a Tesla Model X.
