Tesla’s Model 3 is set to cost $35,000 upfront, but the car could be significantly cheaper thanks to federal and state tax incentives. A Bloomberg report reveals that the final price may hinge on how quickly Tesla can gets its new electric vehicle onto the street.
The car’s final price might be as low as $25,000 in some parts of the country. A federal income tax credit would cover $7,500, with the rest coming from individual state and local credits. This should push the vehicle well below the average price for a new car in the U.S., which is $33,560 as of April 2015.
However, those federal incentives won’t be around forever. The tax credit was introduced to help new companies and products launch, and only covers the first 200,000 EV sales for each firm. After that, the incentives quickly drop off before hitting $0.
Tesla is already on pace to sell its 200,000th car by mid-2018. The Model 3 is currently slated to launch in 2017, but, if history is any indication, the car could be delayed by as much as a year. The remaining tax incentives may be a lot less appealing by then.
Even if the Model 3 does launch when promised, the company could still run into trouble. If the car is a hit, Tesla may sell its 200,000th electric car even soon than expected.
Tesla is set to reveal the Model 3 and start taking pre-orders next month. Hopefully the company can also offer a concrete production timeline at the unveiling, which should help clear up the final price.