Tesla Model 3 Base Price Falls To $44,000 As Federal Tax Credit Phaseout Begins

model 3 2
When Elon Musk first announced the mainstream Model 3 electric vehicle from Tesla in mid-2016, he proclaimed that the vehicle would have a base price of $35,000. However, as is often the case with Tesla product launches, the company has instead pushed pricier trim levels and has yet to actually release its promised $35,000 car.

As a result, up until this point, the cheapest Model 3 that you could purchase featured a base price of $46,000. Tesla announced today that it is now dropping the price of that particular Model 3 by $2,000, bringing it to $44,000. This move is in response to the fact that Tesla customers can no longer claim the full $7,500 federal tax credit on a new EV purchase as of January 1st, 2019. Instead, that credit has been cut in half to $3,750.

model 3

The $2,000 price reduction is meant to soften the blow of the reduced tax credit, but doesn’t completely offset the shortfall. With that being said, every little bit helps for those that didn’t get their orders in before the new year to take advantage of the full $7,500 credit.

Tesla provided the following statement to Electrek regarding the price change:

Moving beyond the success of Q4, we are taking steps to partially absorb the reduction of the federal EV tax credit. Starting today, we are reducing the price of Model S, Model X and Model 3 vehicles in the U.S. by $2,000. Customers can apply to receive the $3,750 federal tax credit for new deliveries starting on January 1, 2019, and may also be eligible for several state and local electric vehicle and utility incentives, which range up to $4,000.

That $44,000 outlay for a Model 3 gets you a single, rear-mounted electric motor with the “mid-range” battery option that’s good for an EPA-rated 260-mile driving range. The vehicle can scoot from 0 to 60 mph in 5.6 seconds and reach a top speed of 125 mph. The $51,000 dual-motor Model 3 features the “long-range” battery, 310-mile range, hits 60 mph in 4.5 seconds and has a top speed of 145 mph. Finally, the $62,000 dual-motor Model 3 Performance reduces 0-60 times to 3.3 seconds and tops out at 155 mph.

model 3 3

Given that the entire Tesla EV range is affected by the reduced federal tax credit and the subsequent price cut, the Model S 75D, Model X 75D, Model S 100D, and Model X 100D are now priced from $76,000, $82,000, $94,000 and $97,000 respectively.

As for the mythical $35,000 Model 3 with the “standard battery”, the Tesla website says that availability is still “4-6 months” away.