Elon Musk opens Tesla Model 3 sales to all. Auto sales experts give 3 reasons consumers may want to wait

  • Tesla this week announced that its Model 3 is open to all for sale in North America.
  • The Model 3 available for purchase is not the $35,000 base model, and consumers should expect to pay roughly $50,000 minimum for upgraded configurations.
  • The $7,500 rebate for electric-vehicle purchases is nearing expiration, making the timing of an EV purchase more complicated.

The Tesla Model 3 for the first time is open for sale to all car buyers in North America — with a few catches.

With a $2,500 deposit toward the overall cost of the new Tesla model, customers can now buy a Model 3 and expect delivery in one to three months, according to Tesla. The car is Elon Musk's attempt to make a mass-market sedan in the price range of consumers not in the luxury-car segment.

The electric-car maker has been rushing to ramp up production of the Model 3, on which its short-term financial success depends. But consumers may want to wait.

Buying a Model 3 now doesn't mean getting the true mass-market version of the sedan. There are a few price considerations and other factors that car sales experts at leading automobile review services advise consumers to keep in mind before ponying up the Tesla deposit money.

The existing reservation list for new Tesla Model 3 electric vehicles is more than 400,000 people long.
Stephen Lam
The existing reservation list for new Tesla Model 3 electric vehicles is more than 400,000 people long.

1. The currently available Model 3 is not the $35,000 one.

The Model 3 in its most affordable configuration, a $35,000 vehicle, will not be available for another six to nine months, according to Matt DeLorenzo, senior managing editor at Kelley Blue Book.

For now, the cheapest version of Model 3 available is roughly $50,000, according to data from car site Edmunds. That's because Tesla is only producing upgraded dual-motor and performance versions of the Model 3 until early next year, when production of the standard $35,000 model is expected to begin.

Car buyers who pay the $2,500 deposit now are putting that toward the purchase of one of the more expensive Model 3 configurations. One advantage: Buyers do get to create their own configuration among the upgraded model features if they are ready to buy now.

If a car buyer wants the less-expensive Model 3, nothing has changed with this week's announcement. Car experts at Edmunds, Kelley Blue Book and Consumer Reports said the existing reservation list is more than 400,000 people long.

“Right now it’s put up or shut up,” said Edmunds' analyst Jeremy Acevedo.

2. Tax credits are winding down for EV buyers.

One of the big benefits of buying a Tesla is the $7,500 federal tax rebate, but that is coming to an end, as Tesla has itself noted. By 2020, customers will be paying $7,500 more for any Tesla vehicle because the company will have exhausted the entire pool of potential tax rebates available to it. This looming expiration could serve as an impetus for consumers to opt for purchase now, but on the flip side, they would be buying the more expensive versions of the Model 3. Any consumer who wants the $35,000 model but is worried about the tax rebate wouldn't really solve that problem by paying for a $50,000 model today.

For car buyers in the current reservation line for the base version of the Model 3, it is impossible to know whether Tesla will run out of tax credits before their vehicle is ready, Kelley Blue Book's DeLorenzo said.

“With so many gray areas, it makes it very challenging to predict when you’ll acquire the vehicle,” Acevedo said. “That’s a bit of a head-scratcher.”

Tesla confirmed on Thursday it had reached its 200,000 vehicle-production benchmark. Two quarters after a company crosses this threshold, tax credits begin to phase out, meaning Tesla customers will be able to receive full credit until January, half credit six months later, and all credits will expire January 2020.

The best strategy, especially for those interested in the standard Model 3, is to wait at least two years, DeLorenzo said. By the time Tesla works through the upgraded models, they will be pushing to sell the basic version, making incentives to buy more likely, he said.

3. The Chevy Bolt and used Teslas are worth considering.

Given the current cost of the Model 3, consumers looking for a mass-market all-electric vehicle may want to consider other options, including used Teslas.

At around $50,000, a Model 3 comes close to the price of certified used Tesla models, DeLorenzo said. For example, customers can purchase a used, low-mileage Model S at around the same price.

“You might want to consider, if you’re willing to spend that much for a Tesla, to look at a Model S,” said Jake Fisher, director of auto testing at Consumer Reports. “For less than the price of getting a new Model 3, you might be able to end up with a low-mileage Model S."

Consumer Reports and Kelley experts also recommended GM's Chevrolet Bolt as their top pick for a comparable model, and one that features more interior room and similar performance.

“[The Chevrolet Bolt] occupies the space of an entry-level car, and you can get them right now,” DeLorenzo said. “You get a $7,500 [tax] credit; nobody’s asking for a deposit. It’s kind of a no-brainer.”

GM also is nearing the end of its ability to offer the $7,500 tax rebate on new car purchases.

One thing the Bolt doesn't have is Tesla's brand appeal, and many consumers may want a Tesla and nothing else. That's a sentiment that exists even among the car experts. "There is nothing comparable in the market to the Tesla," Edmunds' analyst Acevedo said.

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