California residents have an advantage when it comes to purchasing an entry-level electric vehicle (EV) from Tesla. Despite the listed price of $40,240 for a single-motor, rear-wheel drive Tesla Model 3, individuals residing in California can significantly reduce the cost through available state and federal incentives. Taking advantage of these schemes, along with Tesla’s recent price reductions, can potentially bring down the price of a Model 3 to just $25,240. Surprisingly, this is even lower than the starting price of a Toyota Camry, which begins at $26,320, as reported by Reuters.
Previously, certain versions of the Model 3 were only eligible for half of the $7,500 federal tax credits due to new regulations regarding the geographic origin of the EV’s battery and components. However, Tesla quickly adapted to the legislation and recently announced that every Model 3 now qualifies for the full tax credit.
Although Tesla has not officially disclosed the specific technical changes made to ensure eligibility for the full $7,500 tax credit, analysts interviewed by Reuters speculate that the automaker may have replaced the CATL battery in the base model with an alternative from Panasonic or LG. While the unit cost of these batteries might be higher, it would be outweighed by the benefit of granting the vehicle eligibility for the maximum tax credits.
Caspar Rawles, an analyst at Benchmark Mineral Intelligence (BMI), suggested that it is highly likely Panasonic is the supplier for these batteries, but there could be concerns about cell availability if they need to supply enough for all U.S. Model 3s.
With the possibility of owning a Model 3 for just $25,240, many prospective EV buyers in California will likely be enticed to visit Tesla showrooms. However, it is worth noting that a significantly revised version of the Model 3 is expected to be released in the latter half of 2023. This knowledge might tempt some buyers to hold off and see what Tesla has in store for the future, considering the current model is already six years old.
