Tesla managed to reduce prices below average car costs in the US

Tesla‘s new and latest price drop in the United States, both in the Model 3 and Model Y ranges, in line with the aggressive strategy shown by the brand since the beginning of this year, has achieved an important milestone. According to the latest reports, a basic Tesla Model 3 already costs $9,000 less than the average price of purchasing a vehicle in the United States.

Prices have dropped so much in the Tesla catalog, affecting the full range of the Model 3 and the Long Range and Performance versions of the Model Y, that if we calculate the ownership costs over the years we see how these are equal to a generalist vehicle as popular as, for example, the Toyota Corolla.

Still, this price war might not be as profitable as it seems for Tesla. According to Bloomberg, the general drop in prices for its electric cars could cost Elon Musk’s company $1.2 billion a year. And all this, in a context in which Tesla’s profit margins have fallen by 18.1% in the second quarter of 2023 (the drop was 26% last year), while its sales in the last quarter have dropped by 30,000 units worldwide.

Tesla’s record prices and market parity

One of the challenges of the industry with electric cars is to achieve, sooner or later, that their prices are comparable to those that have combustion engines. Tesla seems to be achieving this, at the cost of everything previously mentioned.

With the latest price reduction, the cheapest Tesla Model 3 in the United States has a price of $38,990, about 36,790 euros at the exchange rate before taxes and additional fees. This is about 8,200 euros less than the average price of a vehicle in the North American country. There, the Model 3 is more than 6,000 euros cheaper than a basic BMW 3 Series and almost 5,500 euros cheaper than an entry-level Mercedes C-Class.

Tesla Model Y

If we do the exercise of calculating ownership costs in the first three years, considering the sales price and the cost of energy to move, the Tesla Model 3 can even look up to compact models like the Toyota Corolla. According to InsideEVs estimates, the Japanese compact would have a total cost of about 25,330 euros, while the Model 3 would be close to 25,000 euros.

All this, be careful, without counting maintenance costs and other expenses. And above all, taking into account that tax credits are not applied in the same way in all states of the North American country. Tesla would access federal aid of about 7,000 euros and an additional one from the state of New York, for example, of almost 1,900 euros.

These estimates vary, obviously, depending on the version of Tesla’s electric cars purchased and the region in question, but we can already say that price parity between both technologies, at least under these conditions, is already real.

The Tesla Model Y can boast of having also seen a wild price reduction in the US: so far this year alone, the most expensive versions have seen their price reduced by 25%. While the most basic Model 3 starts at $38,990, the Model Y Long Range (which has received a new price reduction) starts at $48,490.

Elenor Kling

A tech lover and generally a car enthusiast who likes to do a lot of research and share knowledge.

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