Tesla Model 3
Tesla’s Model 3 is already a game changer: Tech, Value and Economics prevail
Yesterday I spoke to BBC Newsday about the Tesla Model 3 and one of the questions they asked was “is the Tesla Model 3 a game changer”. Even before incentives the Model 3 competes with other entry level luxury vehicles like the BMW 3 series and Audi A4. With incentives it moves even further down-market, competing with big sellers like the Toyota Camry (the USA’s top selling car in 2016). That definitely moves Tesla into the mass market with a lot of opportunity to grow. There are some additional factors though that I think makes it a true game changer.
Industry Affect
It’s already a game changer. Just over a year ago most automakers still dismissed Tesla as a niche manufacturer and articles still wrote about how electric vehicles were decades out or may never come to fruition. Then Telsa had almost 400,000 preorders for a vehicle no one had actually driven, most had only seen through their computer screens, and wouldn’t be available for over a year. I was one of those people.
Fast forward to today, with manufacturers practically falling over each other to announce their own electric vehicle programs and new targets. The discussion has flipped. Articles are no longer written about if electric vehicles are coming but how quickly. I think we have the Tesla Model 3 to thank for that.
Value Proposition
Preorders are one thing, but can the Model 3 compete in a world of mostly combustion vehicles? That will depend on the value customers assign to it. My opinion is that Model 3 is the first lower cost electric vehicle to cross the ‘value threshold’. What I mean by that is that a buyer considering two vehicles in the same class and quality, one electric and one combustion, would chose the Model 3 over the combustion option. The Model 3 is just the better all-around car.
(Tesla)
Consider the Chevy Bolt, a good car, but a more difficult sell on value proposition. Does it actually provide $37,500 worth of value to the buyer or could I purchase an internal combustion vehicle that provides me more value (as per classic capitalism this is largely ignoring the societal and environmental benefits to others, which can be difficult for most buyers to quantify – it’s not right, just reality).
“The Model 3 is just the better all-around car”
The factors at play are complex, the initial purchase price, comfort, reliability, range, acceleration and speed, safety, handling, aesthetics, operating costs, convenience, and environmental impact. These all go into a buyer’s value calculation, mostly subconsciously. For me I can’t think of another vehicle that hits those categories as well as the Model 3.
Economics and Cost Reductions
Customer value is great but Tesla more than any other automaker needs to produce electric vehicles with a decent profit margin. It doesn’t have a lot of gas guzzling expensive SUVs to offset losses on EVs. Other automakers have claimed they are perfectly willing to make EVs at a loss, which seems largely driven by meeting emissions targets in key US states (California, Connecticut, Maine, Maryland, Massachusetts, New Jersey, New York, Oregon, Rhode Island, and Vermont). That may also be why GM is pulling back on Bolt production, if they’re approaching their quotas in those states . In Ontario Canada, which has no such requirements, the Chevy Bolt is sold out until January 2018 and the only one available to test drive is at the non-profit organization Plug’n Drive in Toronto. A lot has been made in the past of Tesla’s business losses, but those include capital investments and R&D. They do in fact make a profit on their vehicles, but invest more money on improvements and expansions than that profit totals. Making an affordable electric vehicle at a profit is a challenge Tesla seems confident they’ve achieved. That’s a big deal. A game changer.
Technology Innovation
To be a game changer though the Model 3 can’t just be another lower priced electric vehicle. It has to be innovative and it is absolutely that. It will be using a new battery format, autonomous driving hardware, and it’ll likely be using Tesla’s newly optimized powertrain with 1 million miles capability + faster acceleration.
Tesla Model 3 prototype from the March 31, 2016 unveiling event in Hawthorne, CA
With those improved batteries and powertrain it should be one of the most efficient electric vehicles on the road. There’s also the Supercharger network which really opens up the options for long distance driving, more than any other manufacturer. These capabilities will set a new benchmark for affordable electric vehicles.
Tonight it will be very interesting to see what the final specs. Will anyone be able to match it? Let the (affordable) EV space race begin!
What do you think? Is the Model 3 a game changer and why?
A new study from the online lending service marketplace LendingTree has put a spotlight on Tesla’s popularity among car buyers looking for a luxury vehicle. From January through November 2024, the Tesla Model Y and Model 3 received the most loan inquiries from car buyers looking to acquire a luxury vehicle.
The study:
- For its study, LendingTree analyzed over 1 million auto loan inquiries for passenger vehicles from January 1 to November 30, 2024.
- To determine which luxury vehicles were most popular among car shoppers, LendingTree took a luxury vehicle make’s total number of queries and divided it by the total number of luxury vehicle queries during the study’s period.
- Carfax’s “Complete Guide to Luxury Car Brands” was used to determine which car brands were considered luxury. Tesla is included in the list.
The Model Y and Model 3’s results:
- As per LendingTree’s study, Tesla’s two mainstream vehicles attracted the top interest among car buyers looking to acquire a luxury car.
- The Tesla Model Y claimed the top spot in the study, with 6.8% of luxury vehicle loan queries being centered on the best-selling all-electric crossover.
- The Tesla Model 3 followed closely at 5.6%, which is quite impressive considering that the vehicle is a sedan.
- Overall, Tesla was the study’s second most sought-after luxury brand after BMW, though this was partly due to the company’s significantly smaller vehicle lineup.
- BMW captured 16.6% of luxury brand queries in the study, while Tesla captured 15.8%.
- This means that Tesla beat out Mercedes-Benz and Lexus, which captured 12.0% and 11.1% of luxury brand inquiries, respectively.
Why it matters:
- As per LendingTree, a good reason behind the popularity of the Tesla Model Y and Model 3 among luxury car buyers may be the vehicles’ reasonable price.
- Despite Tesla being considered a luxury brand, the Model Y and Model 3 are priced very competitively.
- The 2024 Model Y starts at a reasonable $44,990. The Model 3 is even more budget-friendly, praised by Kelley Blue Book as a “bargain among electric sedans” at its price.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
A study from Self Financial has determined that the Tesla Model 3 sedan is the most affordable car to run in the United States. Its sibling, the best-selling Model Y crossover also made it to the list.
This is quite impressive for Tesla’s two mainstream vehicles as the Model 3 and Model Y are both premium priced.
The analysis:
- For its study, Self Financial considered the running costs of the 50 best-selling vehicles from 2022 to 2024 to find out how much it costs to run a car on average in the United States.
- The study took into account the average annual costs for fuel or energy, maintenance, insurance, and fees and taxes of the United States’ best-selling vehicles, among other factors.
- Based on the study’s results, it costs an average of $6,462 per year to run one of the United States’ best-selling vehicles.
- Fuel costs tend to be the largest expense, comprising 34.8% of all annual running costs in the study.
- On average, $2,246 is spent on fuel or energy costs; $1,633 is spent on maintenance costs; $1,763 is spent on car insurance; and $820 is spent on annual fees and taxes.
Tesla’s results:
- Self Financial found that the Tesla Model 3 is the most affordable car to run in the United States, with an annual running cost of $5,061.
- The annual energy costs of the Tesla Model 3 were the lowest in the study at just $636 per year. That’s 71.68% lower than the study average of $2,246.
- The annual maintenance costs of the Model 3 were also the lowest of all the cars that were analyzed in the study, at just $1,143. That’s 30% below the study average of $1,633.
- The Tesla Model 3 would have been even cheaper to run, but the vehicle was the study’s 3rd most expensive car to insure at $2,241 per year.
- The Model 3’s annual fees and taxes were also higher than the study average at $1,041 per year.
- The Tesla Model Y was the study’s 7th most affordable car to run, with an annual fuel cost of $708, annual maintenance of $1,339, annual insurance cost of $2,399, and annual fees and taxes of $947.
Self Financial’s other findings:
- A look at the results of the other vehicles in the study highlights the low running and maintenance costs of Tesla’s two mainstream vehicles.
- Most of the vehicles in the list were notably more affordable than the Model 3 and Model Y, such as the Hyundai Elantra, which was the second most affordable car to run in the United States.
- For context, the Hyundai Elantra, a budget-friendly sedan, had an annual fuel cost of $1,615, annual maintenance cost of $1,435, annual insurance cost of $1,547, and annual fees and taxes of just $508.
Don’t hesitate to contact us with news tips. Just send a message to simon@teslarati.com to give us a heads up.
The new Tesla Model 3 “Highland” has grabbed the Top Rated EV of 2025 crown from noted automotive publication Edmunds, who released their list of best vehicles for the new year earlier today.
The Model 3 underwent a major makeover that included upgrades to its cabin, interior, suspension, exterior, ride comfort, and others, as Tesla revamped the look and performance of what is one of the best-selling vehicles in its lineup.
Edmunds has been critical of Tesla in the past but has also given the company its credit, especially when its due. It seems the Model 3 was one vehicle that the publication could not turn a cold shoulder to, especially considering all of the upgrades Tesla implemented with the new design as it overhauled the look and feel.
Tesla Model 3 and Model Y top US EV sales in 2024: Cox Automotive
Specifically, Edmunds was impressed with Tesla’s ability to provide a more efficient EV with better range ratings, build quality, ride quality, and a more modern and redefined look. It seems that many believe the Model 3 was simply in need of what Tesla calls a “refesh,” and it certainly did well in terms of what media outlets expected.
Edmunds wrote:
“…a major face-lift in 2024 brought improvements everywhere, including more range, a better ride quality, sharper handling and a nicer interior with — finally — professional build quality. Even better, none of this came with a price hike; the Model 3 is still one of the most affordable EVs out there.”
They alos mention that the Model 3 has “always been a good but not great EV.
However, there is plenty to think about when it comes to the all-electric sedan. Reese Counts, Edmunds‘ vehicle test editor, said there are few areas where the Model 3 does not outperform similar vehicles in its class. It’s a vehicle that truly does offer everything that others do, but with a little more.
The Model 3 edged out notable competitors like the Hyundai Ioniq 6 and BMW i5, both vehicles that earned Edmunds‘ “highly recommended” label, but could not quite edge out the Highland’s redefined design and performance.
There were so many improvements to mention when we took the Model 3 “Highland” for a test drive early last year. The most notable was the decreased cabin noise and vast improvements in suspension and handling.
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Please email me with questions and comments at joey@teslarati.com. I’d love to chat! You can also reach me on Twitter @KlenderJoey, or if you have news tips, you can email us at tips@teslarati.com.
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