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.
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:
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.
Please note that our featured image is a Tesla Model X.